Thought du jour: Stiglitz on growth and democracy Fifty year ago, there was a widespread view that there was a trade-off between growth and democracy. Russia, it was thought, might be able to grow faster than America, but it paid a high price. We now know that the Russians gave up their freedom but did not gain economically. There are cases of successful reforms done under dictatorship--Pinochet in Chile is one example. But the cases of dictatorships destroying their economies are even more common. Joseph Stiglitz, Globalization and Its Discontents (Norton, NY, 2003), p. 184. ____________________________________________________________ Thought du jour: Stiglitz on IMF independence The IMF is a _public_ institution, established with money provided by taxpayers around the world. This is important to remember because it does not report directly to either the citizens who finance it or those whose lives it affects. Rather, it reports to the ministries of finance and the central banks of the governments of the world. Joseph Stiglitz, Globalization and Its Discontents (Norton, NY, 2003), p. 12. [Central banks are also public institutions, and even less accountable to the citizens who finance them and those whose lives they affect. Is central bank independence a bad idea? Should central bank presidents be elected to office rather than appointed, and be subject to recall, like the governor of California, when their policies are unpopular with voters? -- LW] ____________________________________________________________ Thought du jour: a tax haven for homeowners The theoretically most sensible tax [on owner-occupied housing] is on the implicit rental income enjoyed by owner- occupiers. Owner-occupiers receive notional rents from themselves, as tenants, on which they pay no tax. Until the early 1960s owner-occupiers [in the UK] did pay such a tax, but one based on 1937 rateable values. Faced with the choice between making the tax realistic and abolishing it, the government chose the politically wiser, but economically less justified, latter course. House prices would now be substantially lower if this had not happened. But a tax that would impose substantial capital losses on the owner-occupiers in the country is not going to happen. Martin Wolf, "A tax haven for homeowners" Financial Times, Nov 14, 2003. pg. 21. [The US government goes even further, allowing homeowners to deduct the interest costs of their investment in addition to the tax-free returns they take in the form of notional rent. No other investment is treated so generously by the US tax code.] ____________________________________________________________ Thought du jour: obesity and sin Here are three propositions that sit together uneasily: 1) The United States is a deeply religious country. 2) Gluttony is one of the seven deadly sins. 3) Americans are the fattest people in the world. .... According to a 1998 Purdue University study, obesity is associated with higher levels of religious participation. (Broken down by creed, Southern Baptists have the highest body-mass index on average, Catholics are in the middle, and Jews and other non-Christians are the lowest.) Jim Holt, "The deadliest sin", Boston Globe, 11/23/2003 www.boston.com/news/globe/ideas/articles/2003/11/23/the_deadliest_sin/ ____________________________________________________________ Thought du jour: competition in Costa Rica's market for professionals Costa Rica's Labour Minister, Ovidio Pacheco, explained that the proliferation of private universities tends to saturate the market for professionals and, for this reason, it is necessary to establish better controls. "Private universities sometimes spring up like black flies, and with this observation I do not want to generalize regarding the quality of their education; nonetheless, it must be recognized that many of these private universities are concerned only with earning profits", Pacheco declared. [Free translation by Larry Willmore. The Spanish original follows.] [E]l el titular de Trabajo, Ovidio Pacheco, aseguró que la proliferación de universidades privadas ayuda a saturar el mercado laboral de los profesionales y, por tanto, es necesario establecer mejores controles. "En algunas ocasiones, las universidades privadas salen como abejones de mayo, y con ello no quiero generalizar sobre su calidad educativa; sin embargo, debe reconocerse que muchas de ellas lo único que desean es lucrar", expresó Pacheco. Esteban Arrieta Arias , "Profesionales enfrentan altos cobros de inscripción", Prensa Libre (San Jose, Costa Rica) 10 November 2003, http://www.prensalibre.co.cr/2003/noviembre/10/nacionales08.html ____________________________________________________________ Thought du jour: books and computers During the sixties, Marshall McLuhan ... announced that the linear way of thinking supported by the invention of printing was on the verge of being substituted by a more global way of perceiving and understanding through TV images or other kinds of electronic devices. .... Were McLuhan still among us, today he would have been the first to write something like "Gutenberg strikes back". Certainly, a computer is an instrument by means of which one can produce and edit images, certainly instructions are provided by means of icons; but it is equally certainly that the computer has become first of all an alphabetic instrument. On its screen there run words and lines, and in order to use a computer you must be able to write and to read. [Extract of a fascinating lecture given in English by renowned Italian novelist and scholar Umberto Eco on 1 November 2003 at the newly opened Bibliotheca Alexandrina. Al-Ahram Weekly in Cairo has published the complete text.] Umberto Eco, "Vegetal and mineral memory: The future of books", Al-Ahram Weekly (20-26 November 2003, Issue No. 665). http://weekly.ahram.org.eg/2003/665/bo3.htm ____________________________________________________________ Thought du jour: Carl Jung [F]or all his flatulence, there were elements of sense in Jung. Reading him is a waste of time, unless you are going to live several centuries at least; reading this biography is also unilluminating. I would recommend instead Anthony Storr’s bracing little book [sic] Jung written in 1973, which in 100 pages distills what good sense and worthwhile ideas there were in Jung, and leaves the thousands of his pages of dross to molder where they belong, unread on library shelves. Anthony Daniels, reviewing _Jung: A Biography_, by Deirdre Bair (Little Brown & Company, 860 pages, $35), The New Criterion Vol. 22, No. 3, November 2003. http://www.newcriterion.com/archive/22/nov03/jung.htm# ____________________________________________________________ Thought du jour: Battling the bureaucracy in Japan The battle began in August when Don Quijote [a discount- retailer] decided to sell non-prescription drugs all day--and all night. Though regulations bar stores from selling medicine without a pharmacist on the premises, the retailer installed videophones at ten stores so that customers wanting a night- time box of aspirin could do so after consulting a pharmacist remotely. .... Local health authorities quickly gave warning that the new service might be illegal. Don Quijote responded by offering instead free minimum doses of non-prescription drugs after- hours (and after a videophone consultation), saying that the regulations covered only sales of drugs. That was beside the point, retorted the health minister. Then, in October, the retailer tested a regulatory loophole. Sales of medicine by catalogue are allowed. So the firm set up an in-store catalogue service, enabling customers to order, pay for and pick up drugs at its shops. "Deregulation in Japan", The Economist, 29 November 2003, p. 61. [Who gains from such regulation? The pharmacists, of course. Predictably, they oppose de-regulation. --LW] ____________________________________________________________ Thought du jour: a housing price bubble? [The Economist magazine continues to sound the arlarm that there is a housing price bubble in many countries, including Britain and "large parts of America". The short article in The Economist requires a subscription to view, but the authors draw on a much longer (61 page!) article by Robert Shiller and Karl Case, titled "Is there a Bubble in the Housing Market? An Analysis". that can be downloaded at http://www.brookings.edu/es/commentary/journals/bpea_macro/papers/20030904_ case.pdf -- LW] While house prices have soared, rents have been fairly flat or have even fallen. In America, Britain and Spain the average net rental yield after maintenance and letting costs has dropped to 3-4%. This is less than mortgage rates, so many landlords are not covering their costs. No problem, retort many: we will make our profit from capital gains. This sounds ominously like an echo of the dotcom bubble, when it was argued that the old link between share prices and profits no longer mattered. "Property prices: shaky foundations", The Economist, 29 November 2003, p. 75. ____________________________________________________________ Thought du jour: governance without government [M]any students and proponents of the EU [European Union] seem to be groping toward the view that the EU can become a democratic non-state. .... [T]his non-state conception appeals to a strong antipolitical disposition that is seen today in many parts of the world but is especially powerful in Europe. This disposition is reflected in the enormous prestige enjoyed by "civil society" and by "nongovernmental organizations," as compared to political parties or to governments. One way of viewing the non-state vision of the EU is that it promises to provide governance without the need for government. Indeed, some Europeans, far from wishing to build a new kind of polity, seem to aspire to the creation of a new nongovernmental organization -- the EU as the world’s largest and most influential NGO. Marc F. Plattner, "Sovereignty and Democracy", Policy Review 122 (December 2003-January 2004). http://www.policyreview.org/dec03/plattner.html ____________________________________________________________ Thought du jour: schooling and knitting in Uttar Pradesh, India Teachers in Uttar Pradesh, India's most populous state, have been told to stop knitting in classrooms and pay more attention to their students. "They are often more interested in knitting than teaching," Neera Yadav, the principal secretary for education in Uttar Pradesh, told The Associated Press. All teachers and clerks are banned from knitting on school premises during school hours. Teachers, however, are fighting back. "People concentrate better when they knit," argued Pancharan Rai, a teachers' representative in the state legislature. Michael Kesterton, "SOCIAL STUDIES: A DAILY MISCELLANY OF INFORMATION", Toronto Globe and Mail, 17 December 2003, Page A24. ____________________________________________________________ Thought du jour: Christopher Hitchens on diets I follow medical advice in only one respect, which is to make sure that I swallow the two shots of alcoholic medicine that doctors now agree is essential for the heart and the arteries. (And remember - no cheating. The New England Journal Of Medicine is very clear on this. At least two drinks, and every day. No skipping. No skimping, please.) .... Consider, I say, that you are born into a losing struggle, as are we all. I have been into this and looked a fair way down the road, and I can tell you that nobody emerges from this struggle a winner. The best way of getting through is to eat and drink heartily, in order to keep up your strength, and to ask yourself why it is that you meet more old drunks than old doctors. Christopher Hitchens, "I don't do diets", Mirror, 18 August 2003. http://www.mirror.co.uk ____________________________________________________________ Thought du jour: women in economics Economics she [Duflo] describes as still a male-dominated field. "I think it’s a combination of things. First, it’s a bit scientific, and many women are not going into scientific fields to start with. Second, it has a connection to politics and to power, and women are less involved in these fields. Third, I think fields evolve their own culture as a function of who is there, and economics is a relatively macho culture. There is a tradition of being relatively aggressive in seminars, which is not suited to all women." "People in economics: Asimina Caminis interviews Esther Duflo", Finance & Development 40:3 (September 2003), p. 7. [Esther Duflo, a 31-year-old native of France and prolific contributor to development economics, is Associate Professor of Economics at MIT.] ____________________________________________________________ Thought du jour: Linus Torvalos on Bill Gates [A]t least to me personally, Microsoft just isn't relevant to what I do. That might sound strange, since they are clearly the dominant player in the market that Linux is in, but the thing is: I'm not in the ''market.'' I'm interested in Linux because of the technology, and Linux wasn't started as any kind of rebellion against the ''evil Microsoft empire.'' Quite the reverse, in fact: from a technology angle, Microsoft really has been one of the least interesting companies. So I've never seen it as a ''Linus versus Bill'' thing. I just can't see myself in the position of the nemesis, since I just don't care enough. To be a nemesis, you have to actively try to destroy something, don't you? Really, I'm not out to destroy Microsoft. That will just be a completely unintentional side effect. "Questions for Linus Torvalos", The New York Times Magazine, 28 September 2003, p. 23. [Linus Toravlos gave Linux to the world free. This operating system was an enormous stimulus to the open-source movement for computer software.] ____________________________________________________________ Thought du jour: teachers and unions On his desk, ... Lombardi [principal of PS 49 in Queens, NYC] keeps a manual titled _Regulations and Procedures for Pedagogical Ratings_, an imposing volume that includes details on the procedure for evaluating and disciplining members of the United Federation of Teachers. From these pages, he has concluded that "it’s impossible to prove incompetency." Give a teacher an "unsatisfactory" rating, and you’re stuck with that teacher for a two-year review. The teacher is stuck, too; he or she can’t leave voluntarily. Robert Kolker, "The Power Principal", New York Magazine, vol. 36, no. 34 (6 October 2003), p. 35. http://www.newyorkmetro.com ____________________________________________________________ Thought du jour: The Prinicipal Challenge The book [_The Principal Challenge_, by Marc Tucker] argues that if schools were businesses, they’d be out of business, mainly because the line managers have been hobbled. Principals spend so much time toeing the line, following picayune government regulations, that they can’t begin to think about education. .... They can’t fire bad custodians, let alone poor teachers. And as academic standards rise and testing becomes the ultimate arbiter of success, principals have neither the power nor the skill to raise their schools’ test scores. The final insult comes from the new federal No Child Left Behind Act, which says that if a school’s scores keep falling, it can be closed, with blame laid at the feet of you-know-who. Is it any wonder principals nationwide are quitting in droves? Robert Kolker, "The Power Principal", New York Magazine, vol. 36, no. 34 (6 October 2003), p. 36. http://www.newyorkmetro.com ____________________________________________________________ Thought du jour: democracy and economic performance There is ... a genuine loss of political freedom and restrictions of civil rights in even the best-performing authoritarian regimes, such as Singapore or pre-democratic South Korea; and, furthermore, there is no guarantee that the suppression of democracy would make, say, India more like Singapore than like Sudan or Afghanistan, or more like South Korea than like North Korea. Amartya Sen, "Why Democratization is not the Same as Westernization: Democracy and Its Global Roots", The New Republic, 6 October 2003. ____________________________________________________________ Thought du jour: finance and economics Until the 1960s, the study of finance was a marginal, low status activity: largely descriptive in nature, taught in business schools not in economics departments, and with only weak intellectual linkages to economic theory. Since the 1960s, finance has become analytical, theoretical and highly quantitative. Although most academic finance theorists' posts are still in business schools, much of what they teach is now unequivocally part of economics. Five finance theorists ... have won Nobel prizes in economics. Donald MacKenzie, "An Equation and its Worlds: Bricolage, Exemplars, Disunity and Performativity in Financial Economics", August 2003 http://www.ed.ac.uk/sociol/Research/Staff/mcknz.htm [MacKenzie is a rare animal: a sociologist who studies financial economics.] ____________________________________________________________ Thought du jour: the dangers of ' total, unfettered democracy' Despite the existence of hundreds of unelected bodies that now help democratic governments make decisions, political philosophers who write about democracy today are mostly radicals in favor of total, unfettered democracy. Seemingly unaware of the problems that made these institutions necessary, blind to the fact that these bodies are responsive to their elected masters, the theorists are content to join with street protests against world government. They sing paeans to the people and urge the ever more direct participation of the people (except in the running of universities, of course, which still run like medieval kingdoms). Fareed Zakaria, _The Future of Freedom: Illiberal Democracy at Home and Abroad (W.W. Norton & Company, New York, 2003), p. 245. ____________________________________________________________ Thought du jour: democracy and collective mediocrity The natural tendency of representative government, as of modern civilization, is towards collective mediocrity: and this tendency is increased by all reductions and extensions of the franchise, their effect being to place the principal power in the hands of classes more and more below the highest level of instruction in the community. But, though the superior intellects and characters will necessarily be outnumbered, it makes a great difference whether or not they are heard. In the false democracy which, instead of giving representation to all, gives it only to the local majorities, the voice of the instructed minority may have no organs at all in the representative body. J.S. Mill, _Considerations on Representative Government_ (1861), chapter VII. http://www.antispecies.com/mill/representative_government/ [Mill was pleading for proportional representation to replace the then (and still!) current practice in the US and the UK of electing a single candidate from each electoral district, thereby leaving minority views without representation.] ____________________________________________________________ Thought du jour: JS Mill on taxes and voting [T]he assembly which votes the taxes, either general or local, should be elected exclusively by those who pay something towards the taxes imposed. Those who pay no taxes, disposing by their votes of other people's money, have every motive to be lavish and none to economize. As far as money matters are concerned, any power of voting possessed by them is a violation of the fundamental principle of free government, a severance of the power of control from the interest in its beneficial exercise. It amounts to allowing them to put their hands into other people's pockets for any purpose which they think fit to call a public one, which, in the great towns of the United States, is known to have produced a scale of local taxation onerous beyond example, and wholly borne by the wealthier classes. J.S. Mill, _Considerations on Representative Government_ (1861), chapter VIII. http://www.antispecies.com/mill/representative_government/ ____________________________________________________________ Thought du jour: Nobel Prizes [W]hite-coated scientists always harp on [one thing] when explaining to us social scientists why we aren't real scientists: The things they discover stay discovered. But we economists keep changing our minds. You know: If you laid all the economists in the world end to end, they still wouldn't reach a conclusion. .... For instance, how in the space of five years could the Nobel Committee give prizes to both Milton Friedman (1976) and James Tobin (1981), monetary theorists with diametrically different views of how the U.S. Fed should conduct monetary policy? You wouldn't see that in physics or medicine, would you? William Watson, "Do economists make a difference?", National Post, 9 October 2003. [More surprising was the 1974 decision of the Committee to grant the prize jointly to Friedrich Hayek and Gunnar Myrdal-- two economists with even less in common than Friedman and Tobin. If I recall correctly, Hayek nearly turned down the prize on learning he would have to share it with Myrdal.] ____________________________________________________________ Thought du jour: bird brains There are some things that the birds do that, colloquially speaking, "just blow us away." We were training [my African Gray Parrot] Alex to sound out phonemes.... [W]e are trying to get him to sound out refrigerator letters, the same way one would train children on phonics. We were doing demos at the Media Lab for our corporate sponsors; we had a very small amount of time scheduled and the visitors wanted to see Alex work. So we put a number of differently colored letters on the tray that we use, put the tray in front of Alex, and asked, "Alex, what sound is blue?" He answers, "Ssss." It was an "s", so we say "Good birdie" and he replies, "Want a nut." Well, I don't want him sitting there using our limited amount of time to eat a nut, so I tell him to wait, and I ask, "What sound is green?" Alex answers, "Ssshh." He's right, it's "sh," and we go through the routine again: "Good parrot." "Want a nut." "Alex, wait. What sound is orange?" "ch." "Good bird!" "Want a nut." We're going on and on and Alex is clearly getting more and more frustrated. He finally gets very slitty- eyed and he looks at me and states, "Want a nut. Nnn, uh, tuh." Not only could you imagine him thinking, "Hey, stupid, do I have to spell it for you?" but the point was that he had leaped over where we were and had begun sounding out the letters of the words for us. This was in a sense his way of saying to us, "I know where you're headed! Let's get on with it," which gave us the feeling that we were on the right track with what we were doing. These kinds of things don't happen in the lab on a daily basis, but when they do, they make you realize there's a lot more going on inside these little walnut-sized brains than you might at first imagine. "THAT DAMN BIRD", A Talk with Irene Pepperberg, Edge 126 (September 23, 2003) http://www.edge.org ____________________________________________________________ Thought du jour: good looks and teaching evaluations Professors aren't known for fussing about their looks, but the results of a new study suggest they may have to if they want better teaching evaluations. Daniel Hamermesh, a professor of economics at the University of Texas at Austin, and Amy Parker, one of his students, found that attractive professors consistently outscore their less comely colleagues by a significant margin on student evaluations of teaching. The findings, they say, raise serious questions about the use of student evaluations as a valid measure of teaching quality. In their study, Mr. Hamermesh and Ms. Parker asked students to look at photographs of 94 professors and rate their beauty. Then they compared those ratings to the average student evaluation scores for the courses taught by those professors. The two found that the professors who had been rated among the most beautiful scored a point higher than those rated least beautiful (that's a substantial difference, since student evaluations don't generally vary by much). Gabriela Montell, "Do Good Looks Equal Good Evaluations?", Chronicle of Higher Education Career Network, 15 October 2003. ____________________________________________________________ Thought du jour: bad writing [I]n A Defense of Poetry, English Prof. Paul Fry writes: "It is the moment of non-construction, disclosing the absentation of actuality from the concept in part through its invitation to emphasize, in reading, the helplessness -- rather than the will to power -- of its fall into conceptuality." If readers are baffled by a phrase like "disclosing the absentation of actuality," they will imagine it’s due to their own ignorance. Much of what passes for theory in English departments depends on this kind of natural humility on the part of readers. The writing is intended to look as though Mr. Fry is a physicist struggling to make clear the Copenhagen interpretation of Quantum Mechanics. Of course, he’s just an English professor showing off. Denis Dutton, "Language Crimes: A Lesson in How Not to Write, Courtesy of the Professoriate", The Wall Street Journal, February 5, 1999. http://www.denisdutton.com/language_crimes.htm [Denis Dutton is editor of the journal _Philosophy and Literature_ and sponsors an annual Bad Writing Contest. "to solicit the most egregious examples of awkward, jargon- clogged academic prose from all over the English- speaking world".] ____________________________________________________________ Thought du jour: school vouchers I've always found it a little odd that liberals hand the voucher idea to Republicans ... rather than grabbing it for themselves. ... the case is moral rather than merely educational. ... To require poor people to go to dangerous, dysfunctional schools that better-off people fled years ago, and that better-off people would never tolerate for their own children--all the while intoning pieties about ‘saving' public education--is worse than unsound public policy. It is repugnant public policy. Jonathan Rauch, "TRB From Washington Choose or lose," The New Republic, November 10, 1997. Quoted in David W. Kirkpatrick,"On Being Consistently Inconsistent ", SchoolReport, 23 October 2003. http://www.schoolreport.com/schoolreport/index2.html ____________________________________________________________ Thought du jour: trade policy [T]rade policy should be taken out of the hands of foreign ministries and trade negotiators - who regard every tariff cut or reduced barrier of any kind as a concession requiring compensation - to finance ministries, central banks and mainstream government economic advisers who can see that citizens in their own countries are among the biggest gainers from facing down the producer interest groups. Samuel Brittan , “The USA and Europe: Two, three or more economic cultures?”, Gulbenkian Foundation Conference, Lisbon 21/10/03. http://www.samuelbrittan.co.uk ____________________________________________________________ Thought du jour: How Canada's Indian Act promotes poverty If native land were transferred from the Crown to individual band members, it would then be up to those individuals to decide if they want to transfer the land into a communal arrangement (not unlike Hutterite communities), allow for the property to be owned and managed individually, or some combination of approaches. .... Most Canadians can borrow against their own private property and thus obtain capital to invest in new business ventures. But, without property as collateral, people living on reserves have difficulty obtaining credit or doing deals with outside investors. In effect, the wealth of the land is underutilized. .... The Centre for Aboriginal Policy Change believes all Canadians are fundamentally alike. Legislation and government policy must be based on fairness and equality. It will only be through the elimination of the Indian Act that all Canadians will receive the same degree of freedom and enjoy the same rights and responsibilities. Tanis Fiss, "New Approach to Aboriginal Policy", Canadian Taxpayers Federation - Center for Aboriginal Policy Change, 26 August 2003. http://www.taxpayer.com/ltts/AboriginalCentre/August26-03.htm ____________________________________________________________ Thought du jour: globalization and local cultures The survival of Jewish civilization--despite 2,000 years without a state and the scattering of its diaspora to nearly every nation on Earth--undermines the claim that globalization creates a homogenized world that destroys local cultures. Jews accommodated, and at times embraced, the foreign cultures they lived in without sacrificing their identity. The golden age of Jewish learning was not in ancient Israel, but in medieval Spain, where Jewish religious study, literature, and poetry flourished under the influence of Muslim scholars. Mark Strauss, "Antiglobalism’s Jewish Problem", Foreign Policy (November/December 2003) http://www.foreignpolicy.com/story/story.php?storyID=13958 ____________________________________________________________ Thought du jour: Nobel Laureates Hayek and Stiglitz [Friedrich A.] Hayek [awarded the Nobel Prize in economics in 1974] would have the government tolerate messy competition. His point is that with the optimal outcome unknown, government resolution of issues shuts off the learning process that market competition provides. [Joseph] Stiglitz [awarded the Nobel Prize in 2001] sees the messiness in real-world economies, and he claims to have the right solution in every case. .... Stiglitz's outlook is that markets are imperfect, but he is not. Where Marx offered dictatorship of the proletariat, Stiglitz would give us dictatorship of the Nobel Laureate. Between the two, we might be safer with Marx. Arnold Kling, "Hayek, Stiglitz, and Michael Powell", AIMST #214, 2003. http://arnoldkling.com/~arnoldsk/aimst5/powell.html ____________________________________________________________ Thought du jour: parental choice I have confidence that people will make thoughtful decisions concerning their children. Consider a neighborhood couple, who are very left-wing and very committed to the public school system. She is a long-time public school teacher. He recently stopped going to his synagogue and started going to Quaker meetings because he was upset that his rabbi did not oppose the war in Iraq. For their own children, they chose a Jewish private school -- obviously not for the religious education. On the other hand, even though I favor vouchers, we sent our children to the public school because we did not want the ethnic and economic homogeneity that comes with a private school under today's regime of very limited choices among private schools. The point is that when people make decisions about their own children, they seem to make them with great care and a fair amount of wisdom. They certainly seem less dogmatic and hypocritical than when they make decisions about other people's children. Arnold Kling, "Mandatory Libertarianism", Tech Central Station, 07/28/2003. http://www.techcentralstation.com/072803A.html ____________________________________________________________ Thought du jour: school vouchers [C]onsidering that vouchers are viewed as a "radical" idea in education, the case against them is remarkably flimsy. Yes, it is possible that abusive or incompetent parents could make bad choices for their children, but taking the choice away from every parent because of the potential bad choices of a few seems unwarranted. Yes, it is possible that some children will go to schools where they do not learn the theory of evolution, but today many children go to schools where they do not even learn to read and write. Yes, it is likely that a privatized education system will not give everyone an equal education, but neither does today's system. Arnold Kling, "Mandatory Libertarianism", Tech Central Station, 07/28/2003. http://www.techcentralstation.com/072803A.html ____________________________________________________________ Thought du jour: voting rights for children? Of the 400 motions tabled for discussion in Germany's new parliamentary session, which began yesterday, one of the strangest must be a proposal to lower the country's voting age to zero. Under the proposed legislation, Germans will have a vote at birth, to be cast by their parents until they reach 18. The goal is to promote political awareness and civic involvement among German youth. The unstated goal is to undercut the growing electoral clout of Germany's elders. .... The new law does not really give children a vote but gives parents of minors an extra vote for each child. As workers, these parents pay for Germany's costly public pension system. Attempts to reform the system, which all experts agree is unsustainable, routinely meet with stiff opposition from Germany's powerful lobby of retired people. Craig Romm, "A vote at birth is a poor way to reform pensions", Financial Times (Sep 12, 2003), pg. 15. ____________________________________________________________ Thought du jour: early China and Greece compared What do the comparisons between the eastern and the western backgrounds show? Well, there is a lot in common (otherwise a comparison of the two would be futile); but there are also numerous differences .... And in any event, it is the differences which matter. The chief of them are these. First, "compared with their Chinese counterparts, Greek intellectuals were far more often isolated from the seats of political power". Second, in Greece there was a "lack of bureaucratisation: there was no institution analogous to the Chinese astronomical bureau". Third, a Greek was not required to produce any "formal qualifications" in order to teach or to practise as a philosopher or scientist or doctor. Jonathan Barnes, reviewing _The Way and the Word: Science and Medicine in Early China and Greece_ by Geoffrey Lloyd and Nathan Sivin (Yale University Press, 2003), London Review of Books, 23 October 2003. http://books.guardian.co.uk/lrb/articles/0,6109,1076928,00.html ____________________________________________________________ Thought du jour: Stiglitz on the benefits of free trade Because of globalization many people in the world now live longer than before and their standard of living is far better. People in the West may regard low-paying jobs at Nike as exploitation, but for many people in the developing world, working in a factory is a far better option than staying down on the farm and growing rice. .... Joseph Stiglitz, Globalization and Its Discontents (Norton, NY, 2003), p. 4. ____________________________________________________________ Thought du jour: public and private supply of water It is a nice irony that in the United States, the great champion of free-market capitalism, almost all the water is delivered by the public sector, whereas in France, one of unbridled capitalism's sternest critics, water has been provided by private companies for 150 years. John Peet, "A survey of water", The Economist, 19 July 2003, p. 7. ____________________________________________________________ Thought du jour: education and the Industrial Revolution If England led the rest of the world in the Industrial Revolution, it was despite, not because of, her formal education system. Joel Mokyr, The Lever of Riches (Oxford University Press, 1990), p. 240. [Scotland had universal literacy and a much more educated population, yet lagged behind England in in the 19th century. The same was true of Sweden. --LW] ____________________________________________________________ Thought du jour: the work ethic During the Industrial Revolution, Europeans began to work longer--much longer. .... While output per hour worked is very similar, 19th-century Europeans spent nearly 1.5 times as much time toiling in factories, offices, and workshops and on the fields as do workers in today's Third World. Hans-Joachim Voth, "Living standards during the Industrial Revolution: an economist's guide", American Economic Review, May 2003, p. 223. ____________________________________________________________ Thought du jour: property rights and development Doug North has made a career out of talking about how parliamentary government and independent courts established secure property rights in Britain, and arbitrary royal government and dependent intendents created insecure property rights in France, hence the English economy boomed while the French economy stagnated in the century and a half before the coming of the Industrial Revolution. I've always had ... worries about this line of argument. ... Consider ... Provencal canals. If you wanted to build a canal in eighteenth-century Provence, you had to get the active cooperation of--and suffer a potential holdup by--each individual jurisdiction along the canal's root. In England, by contrast, the King-in-Parliament would help you: eminent domain was there if you were politically well-connected and if you couldn't reach a satisfactory bargain for a right-of- way on your own. It is overscrupulous respect for "property rights"--the fact that that absolute monarch, that enlightened despot Louis King of France could or would not seize land for canals--that played a key role in hindering the development of commercial infrastructure. Brad DeLong, "Notes: Some Historical Questions", 29 July 2003. http://www.j-bradford-delong.net/movable_type/2003_archives/001879.html [This reservation applies equally to Hernando De Sotos' book _The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else_.] ____________________________________________________________ Thought du jour: alcohol and the young Although the minimum legal age for purchasing alcohol in Spain is 16 years, no one is concerned with formalities of the law.... Spaniards sharply distinguish legality from morality. The penal code originates from the central government, whereas the code of moral behavior comes from the norms of the people. Consequently, there is a large part of the penal code to which the citizenry is morally indifferent.... My own observations reveal that youngsters of 10 and 12 years are able to buy liter bottles of beer in grocery and convenience stores if they choose. J.F. Rooney, "Patterns of Alcohol Use in Spanish Society," in D.J. Pittman and H.R. White, eds., _Society, Culture, and Drinking Patterns Reexamined_ (Rutgers Center of Alcohol Studies, New Brunswick, NJ, 1991), p. 393. "In sum, Spain along with other Southern European countries allows its youth early access to alcoholic beverages without the concomitant problems of rowdy behavior, vandalism, and drunk driving that Americans typically associate with youth drinking." D.J. Pittman, D.J., "Cross Cultural Aspects of Drinking, Alcohol Abuse, and Alcoholism," in A.L. Waterhouse and J.M. Rantz, eds., _Wine in Context: Nutrition, Physiology, Policy_ (American Society for Enology and Viticulture, Davis, CA, 1996), p. 4. ____________________________________________________________ Thought du jour: official vs unofficial control of substance abuse Official or formal controls are far less effective in shaping behavior than are the unofficial informal controls that people exert in their daily interactions, through gossip, exhortations, or other forms of social sanction.... Addressing attitudes and values is probably the most effective way, in the long run, to change patterns of belief and behavior, because even the strictest nation-state is hard put to enforce its laws and regulations when they conflict with the culture of the people. Dwight B. Heath, _International Handbook on Alcohol and Culture_ (Greenwood Press, Westport, CT, 1995), pp. 343, 358- 359. ____________________________________________________________ Thought du jour: binge drinking (1) The Camba of Bolivia have gained considerable notoriety in the alcohol literature because more of them drink, they drink more often, and they drink more of the most potent alcoholic beverage in customary usage anywhere in the world, yet they have virtually no social, psychological, or economic problems in connection with drinking.... There is no verbal or sexual aggression, no destruction of property, no drunken homicide or suicide. On the contrary, drinking is a time for cordiality and easy social interaction that are rare in other times of their lives.... Dwight B. Heath, "Alcohol and Aggression," in E. Gottheil et al., _Alcohol, Drug Abuse and Aggression_ (Charles C Thomas, Springfield, IL, 1983), p. 93. A people who drink as heavily and frequently as any group yet known, the Camba of eastern Bolivia, attribute no ill effects to their drinking other than the irritation caused to the mouth and throat by their liquor, an undiluted distillate of sugarcane that contains 89 percent ethyl alcohol. Most Camba men participate in recurrent drinking bouts, which may last for a whole weekend. A drinker may pass out several times in the course of a bout and, upon reviving, drink himself quickly into a stupor again. David G. Mandelbaum, "Alcohol and culture", in M. Marshall (editor), _Beliefs, Behaviors and Alcoholic Beverages: A Cross-Cultural Survey_ (University of Michigan Press, Ann Arbor, 1979), pp. 16-17. [Why does similar binge drinking in Russia, or North America, apparently have such different effects? Further, absence of social problems I can believe, but absence of economic effects is, to my mind, beyond belief. Such heavy drinking must affect worker productivity, unless it is limited strictly to weekends and holidays, which may be the case. -- LW] ____________________________________________________________ Thought du jour: binge drinking (2) In general, addiction to alcohol seems to be quite rare outside certain societies of Western civilization. Among most peoples whose men are expected to drink heavily and frequently, a man does not do any solitary drinking nor does he have withdrawal symptoms if he cannot get alcohol. He may not like to do without it, but he does not feel gripped by an iron compulsion to get a drink in order to be able to keep alive. David G. Mandelbaum, "Alcohol and culture", in M. Marshall (editor), _Beliefs, Behaviors and Alcoholic Beverages: A Cross-Cultural Survey_ (University of Michigan Press, Ann Arbor, 1979), p. 17. [A]lthough alcohol seems to be an important factor in homicide rates [in Russia], many people drink, often and to excess, without violent consequences. This suggests that the role of alcohol may vary according to the cultural context and social situations involved. W. A. Pridemore, "Vodka and violence: alcohol consumption and homicide rates in Russia", American Journal of Public Health 92:12 (December 2002), p. 1928. ____________________________________________________________ Thought du jour: British politics It is a tragedy that in Britain the cause of competitive market capitalism has had to be represented by a party with authoritarian moralistic tendencies, a xenophobic posture towards foreigners and an instinct to punish and condemn. Samuel Brittan, "Liberalism needs a louder voice", Financial Times, 1 August 2003. www.samuelbrittan.co.uk [Sam Brittan is referring to the Conservatives, and complains that the Liberal Democrats pander to Labour, "putting in bids to introduce yet more government intervention as a cure- all".] ____________________________________________________________ Thought du jour: Soviet medicine Soviet medicine was a mixture of the irrelevant, the reasonably competent, and the downright dangerous. A drop in some of it, just like the fall in GDP, does not all represent a loss. Moreover, there was over-hospitalisation and a huge waste of doctors' services simply to certify absence from work. Judith Shapiro, "The Russian mortality crisis and its causes", in A. Aslund (ed.), _Russian Economic Reform at Risk_ (Pinter Publishers, London, 1995), p. 154. ____________________________________________________________ Thought du jour: infant mortality in Chile, Costa Rica and Cuba Infant Mortality Rates Year Chile Costa Cuba Rica 1960 119.5 74.3 35.9 1965 97.3 75.0 37.8 1970 82.2 61.5 38.7 1973 65.8 44.8 28.9 1980 33.0 19.1 19.6 1990 16.0 14.8 10.7 1992 13.9 13.7 10.2 2000 10.1 10.2 7.0 If we believe that the data are reasonably accurate, it is remarkable to note that in 1960 the infant mortality rate in Cuba was less than half of the rate in Costa Rica and less than a third of the rate in Chile. ... [Both] Costa Rica and Chile were able to reduce infant mortality sharply, to the point that it is very close to Cuba's. .... We can conclude that both Costa Rica and Chile were able to achieve very significant improvements in well being without having to suffer the devastating effects of socialism. Juan Belt, "Costa Rica in Mesa-Lago's Market, Socialist and Mixed Economies: Chile, Cuba and Costa Rica", Cuba in Transition, ASCE 2001, p. 225. [The data for the year 2000 is my addition --LW.] ____________________________________________________________ Thought du jour: the cost of medical care The contribution of improved health care to living standards ... is little reflected in the national income accounts. Instead, what is most visible in everyday statistics is the growth of health-care spending — [in the US] from around 5 percent of GDP in 1960 to around 14 percent today and rising. Often that gain is attributed to something called "cost disease" ever since economist William Baumol diagnosed it in a famous 1967 paper ("Macroeconomics of Unbalanced Growth: The Anatomy of Urban Crisis"). The idea is doctors and nurses aren’t much more productive that they were forty years ago — nor are teachers, entertainers, policemen, auto repairmen or fiddlers in string quartets. Some activities just can’t be made more productive. We are doomed to pay some workers more and more for the same amount of work. But "cost disease" is mostly bunk — because it relies on measures of input prices instead of output prices. The cost of _playing_ a Mozart quartet may not have changed much since the piece was written. The cost of _hearing_ it played has plummeted to nearly zero, thanks recording and telecommunications technology. Much the same is true of health care: great as are the resources we put into it, the value of what we take away is much, much more. David Warsh, "What's the Limit?", economicprincipals.com, August 10, 2003. http://www.economicprincipals.com/issues/03.08.10.html ____________________________________________________________ Thought du jour: civilization and its discontents Anyone who has been through the misery of poverty in his youth, and has endured the indifference and arrogance of those who have possessions, should be exempt from the suspicion that he has no understanding of or goodwill towards the endeavours made to fight ... economic inequality .... To be sure, if an attempt is made to base this fight upon an abstract demand for equality for all in the name of justice, there is a very obvious objection to be made, namely, that nature began the injustice by the highly unequal way in which she endows individuals physically and mentally, for which there is no help. Sigmund Freud, CIVILIZATION AND ITS DISCONTENTS (1930), translated from the German by Joan Riviere. ____________________________________________________________ Thought du Jour: human evolution Considering that the common ancestor of humans and chimpanzees lived only 5 to 6 million years ago, human evolution seems to have been quite rapid. The chimp, our closest living relative, is still a standard ape, whereas we have become a truly weird one. Nicholas Wade, "Can It Be? The End of Evolution?", NY Times Week in Review, 24 August 2003. ____________________________________________________________ Thought du jour: liberating Baghdad, 1917 and 2003 Our armies do not come into your cities and lands as conquerors or enemies, but as liberators. ... It is [not] the wish of [our] government to impose upon you alien institutions. ... [It is our wish] that you should prosper even as in the past, when your lands were fertile, when your ancestors gave to the world literature, science, and art, and when Baghdad city was one of the wonders of the world. ... It is [our] hope that the aspirations of your philosophers and writers shall be realized and that once again the people of Baghdad shall flourish, enjoying their wealth and substance under institutions which are in consonance with their sacred laws and their racial ideals. -- British General F. S. Maude to the people of Mesopotamia, March 19, 1917 The government of Iraq, and the future of your country, will soon belong to you. ... We will end a brutal regime ... so that Iraqis can live in security. We will respect your great religious traditions, whose principles of equality and compassion are essential to Iraq's future. We will help you build a peaceful and representative government that protects the rights of all citizens. And then our military forces will leave. Iraq will go forward as a unified, independent, and sovereign nation that has regained a respected place in the world. You are a good and gifted people -- the heirs of a great civilization that contributes to all humanity. -- President George W. Bush to theee people of Iraq, April 4, 2003 from Niall Ferguson, "Hegemony or Empire?" Foreign Affairs, September/October 2003 ____________________________________________________________ Thought du jour: life expectancies In the year 1000, the average infant could expect to live about 24 years. A third would die in the first year of life, hunger and epidemic disease would ravage the survivors. There was an almost imperceptible rise up to 1820, mainly in Western Europe. Most of the improvement has occurred since then. Now the average infant can expect to survive 66 years. Angus Maddison, The World Economy: A Millennial Perspective (OECD, Paris, 2001), p. 17. ____________________________________________________________ Thought du jour: Bush Admits US Invaded the Wrong Country Crawford, TX (IWR Satire) - President Bush today admitted that the U.S. military invaded the wrong country when it attacked Iraq. It seems instead that the U.S. should have invaded Saudi Arabia. "Recent evidence has come to my attention which shows that Saudi Arabia, not Iraq, is strongly linked to 9/11. Now how the heck were we supposed to know that?" http: //www.internetweekly.org/photo_cartoons/cartoon_bush_saudi_ar abia.html ____________________________________________________________ Thought du jour: illiberal democracy in the Philippines . In the Philippines, ... at least since the People Power revolution of Cory Aquino, Filipinos have "enjoyed" elections. But how many Filipinos would tell you with a straight face that they have ... rule of law ...? The sorry upshot is that a land rich in natural resources, located smack dab in arguably the most dynamic part of the world and boasting one of the world's most talented, hardworking people, still sends thousands of college- educated women abroad to work as other people's maids because there is no opportunity at home. William McGurn, "Votes count, not for everything", Wall Street Journal, Apr 9, 2003. pg. D.10. [McGurn was reviewing Fareed Zakaria's book "The Future of Freedom: Illiberal Democracy at Home and Abroad".] ____________________________________________________________ Thought du jour: the 10 commandments One is presuming (is one not?) that this is the same god who actually created the audience he was addressing. This leaves us with the insoluble mystery of why he would have molded ("in his own image," yet) a covetous, murderous, disrespectful, lying, and adulterous species. Create them sick, and then command them to be well? What a mad despot this is, and how fortunate we are that he exists only in the minds of his worshippers. Christopher Hitchens, "The immorality of the Ten Commandments", Slate, posted Wednesday, August 27, 2003. ____________________________________________________________ Thought du jour: knowledge alone is not enough [T]he uneven diffusion of knowledge among different societies is not the main cause of the huge and growing differences in income and living standards between developed and underdeveloped countries. There is not much in Western science and technology that Liberian or Haitian engineers could not learn in a relatively short time, if perhaps assisted by spending a few years at MIT or CalTech. But on its own, such knowledge would not help these countries bridge the gap; all that would happen is that such highly trained people would search for jobs in richer countries and not go back to their home countries. Instead, the economic conditions for production using sophisticated and interdependent techniques have to be met: stable and honest government, law-and-order, competent, reliable, and compliant workers, and similar normal requirements for a prosperous society. If these are met, all that counts is access costs to the knowledge that is already there. Given the recent sharp fall in the marginal access costs to much of this knowledge, this does not seem to be too high a hurdle. Joel Mokyr, "The Knowledge Society: Theoretical and Historical Underpinnings" paper presented to an expert group meeting at the United Nations on 4 September 2003, p. 17. Posted for downloading (pdf file) at: http://www.unpan.org/dpepa-kmb-ksranda.asp and at http: //www.faculty.econ.northwestern.edu/faculty/mokyr/papers.html [This morning, for the first time, I had the opportunity to hear Professor Mokyr in person. His oral presentation was as impressive as his writing. A truly gifted scholar. --LW] ____________________________________________________________ Thought du jour: theology as anthropology Feuerbach would have loved this book. I have never read a more convincing exposition of his thesis that all theology is anthropology. Afghan theology simply reflects male insecurities. The Taliban were a back-to-basics conservative political movement, an attempt to recreate the paradise of the Arabian peninsula in the time of the Prophet when men wielded absolute power over their families. Matthew Leeming reviewing Asne Seierstad's "THE BOOKSELLER OF KABUL" in The Spectator, 30 August 2003. http://www.spectator.co.uk/bookreview.php3?table=old§ion=current&issue= 2003-08-30&id=1715 ____________________________________________________________ Thought du jour: liberalism and authoritarianism in Latin America . Thanks to General Pinochet, free-market economics is indelibly associated with authoritarianism in the Latin American public mind (a link reinforced by Mexico's Carlos Salinas and Peru's Alberto Fujimori). That makes advocating liberalism a much harder thing for the region's democrats to do. "Memories of a coup", The Economist, 5 September 2003. ____________________________________________________________ Thought du jour: paying for imports with IOUs China is ... now America's leading creditor. Building up huge reserves of surplus capital, China pumps much of the money into loans back to America in the form of US Treasury bonds. China now holds $290 billion in US government debt, more than any other foreign lender .... China and America are thus bound together in a very odd relationship--the poor country lends hundreds of billions to the world's largest economy so that affluent Americans can keep buying the poor country's goods--goods typically produced in the offshore factories built by America's own companies. If this seems a monstrous anomaly, it is actually the logical outcome of how US-led globalization functions. This recycling of capital and goods didn't start with China, though China represents the most extreme example. Elite experts claim it is a "virtuous circle" in which everyone benefits, but that is American hubris. Their reasoning ignores the essential transaction: China winds up with the accumulated profits. The United States winds up with the accumulated debt. William Greider, "Why the WTO Is Going Nowhere", The Nation [from the September 22, 2003 issue]. http://www.thenation.com/doc.mhtml?i=20030922&s=greider [How is this? The US _loses_ paying for its imports with with IOUs? I would like to hire Greider and will pay his salary not in cash, but in IOUs. Would I lose from this exchange? -- LW] ____________________________________________________________ Thought du jour: quis custodiet ipsos custodes? Quis custodiet ipsos custodes? [In English, translated variously as "Who will guard the guardians?" or "who will ward the warders?" ] I hear all this time the advice of my old friends-- "Put on a lock and keep your wife indoors." Yes, but who will ward the warders? The wife arranges accordingly and begins with them. High or low their passions are all the same. Satire 6, The Ways Of Women (c. 120 AD) by Juvenal. http://ccwf.cc.utexas.edu/~paz/roman/juv6.html ____________________________________________________________ Thought du jour: participatory democracy Political activity is time- consuming and, for most people, tedious. Those who take part are unrepresentative because, if they were representative, they would be at home watching television. So the mechanisms of participation are taken over by special- interest groups, ideologues and those who are obsessive about specific issues. These are the people you find at a modern public hearing, inquiry or meeting. The one group not represented is the public. John Kay, "Too many polls are apt to harm a democracy", Financial Times, Aug 14, 2003, pg. 17. [Columnist John Kay credits Fareed Zakaria for this insight. --LW] ____________________________________________________________ Thought du jour: climate and growth Rich countries are not rich because they are specially blessed by their environments. If you were leading a mission to find the economic promised land, you would probably not stop in Finland, Switzerland or Minnesota. But all these areas have become affluent. It is not terrain that matters but people, culture and institutions. John Kay, "Cool countries prosper", Financial Times, Sep 3, 2003. ____________________________________________________________ Thought du jour: taxes and war You don’t cut taxes when you go to war -- not if you want people (especially your enemies) to take you seriously. You raise them. Everyone but the tax- crazies knows that. The trouble is the tax-crazies helped elect Bush, and they are crucial to his re- election. David Warsh, "The Bush Family's Thirty-Year Adventure -- and Our Own", www.economicprincipals.com, September 14, 2003. ____________________________________________________________ Thought du jour: the effect of marriage and divorce on Russian homicide rates [W]hen we include in the [regression] analysis [of regional homicide rates, 1992-2000] number of marriages and divorces per 1000 population, they are both significant with positive and negative signs respectively. Yuri Andrienko, "Crime and violence in Russia: facts and lessons from data analysis", paper presented to the Workshop on "Policy Pathways to Health in the Russian Federation", IIASA, Laxenburg, Austria, 19-20 September 2003. [So, Russia can fight crime by facilitating divorce and discouraging marriage. This finding cries out for a dynamic model: after all, with fewer marriages, there are fewer opportunities for divorce! --LW] ____________________________________________________________ Thought du jour: big government in the USA . Americans commonly attribute their economic advantages over a lethargic and decadent Europe to the fact that free enterprise in the United States does not find itself shackled to a bloated public sector. While social welfare provision is much more restricted than in Europe, the prison statistics qualify the notion that Americans dislike big government. America has more than six million citizens in jail, on probation or on parole, with an incarceration rate ... five times higher than other industrialised democracies. Colin Kidd, "Smut-Finder General", London Review of Books, 25 September 2003. http://www.lrb.co.uk/v25/n18/kidd01_.html [Colin Kidd is reviewing Hellfire Nation: The Politics of Sin in American History by James Morone (Yale University Press).] ____________________________________________________________ Thought du jour: democracy and indigenous peoples [T]he Anglophone white settler democracies of the 19th and 20th centuries were the most democratic yet also among the most racist polities of their time. The economic and cultural interests of indigenous peoples were usually safer under bureaucratic or aristocratic imperial rule than under settler democracy. This would have surprised neither Francesco Guicciardini nor David Hume, both of whom argued that the worst of all fates was to be the subject of a republic of citizens. Dominic Lieven, "Imperial history", Prospect Magazine, June 2003. ____________________________________________________________ Thought du jour: the World Bank's intolerance of gadflies [M]any readers have asked if my statement in the original prologue that "my employer ... the World Bank ... encourages gadflies like me to exercise intellectual freedom" was really accurate. Well almost. It should be modified slightly to "the World Bank ... encourages gadflies like me to find another job." William Easterly, preface to the 2002 paperback edition of _The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics_ (MIT Press, Cambridge, 2001). [Easterly found a new job as Professor of Economics at New York University. Joe Stiglitz, a higher-profile gadfly forced to leave the World Bank, also found a NYC teaching job, at Columbia University.] ____________________________________________________________ Thought du jour: nature and nurture It has often been suggested that childhood maltreatment can create an antisocial adult. New research by Terrie Moffitt of London's Kings College on a group of 442 New Zealand men who have been followed since birth suggests that this is true only for a genetic minority. .... Those with high-active monoamine oxidase A genes were virtually immune to the effects of mistreatment. Those with low-active genes were much more antisocial if maltreated, yet--if anything-- slightly less antisocial if not maltreated. The low-active, mistreated men were responsible for four times their share of rapes, robberies and assaults. In other words, maltreatment is not enough; you must also have the low-active gene. And it is not enough to have the low-active gene; you must also be maltreated. Matt Ridley, "What Makes You Who You Are", Time Magazine, 25 May 2003. [Zoologist Matt Ridley is author of _Nature via Nurture_] ____________________________________________________________ Thought du jour: molecular biology Fifty years ago the molecular structure of DNA was discovered and a new academic specialty came into existence. Though it was called "molecular biology," it was very different from the field that traditionally was called biology and that most people think of when they hear the word. Today the split is so pervasive that many universities have separate departments for molecular biology and traditional kind, which the molecular types denigrate as "birdsy-woodsy" biology. Steven Pinker, from the introduction to "A United Biology: A Talk With E.O. Wilson", Edge, 28 May 2003. http://www.edge.org/3rd_culture/wilson03/wilson_print.html [This reminds me of the split of political economy into economics and political science. --LW] ____________________________________________________________ Thought du jour: teaching science to the masses The time will come when we'll have to move education to broaden its base for everyone. That includes far more science than is now taught on average. The best way to treat science ... is to take it from the top down. Put the big questions to them and show them how science can or cannot answer those questions. Ask the questions right from the beginning of the freshman class: What is the meaning of sex? Why do we have to die? Why do people grow old? What's the whole point of all this? You've got their attention. You talk about the scientific exploration of these issues and in order to understand them you have to understand something about the whole process of evolution and how the body works. "A United Biology: A Talk With E.O. Wilson", Edge, 28 May 2003. http://www.edge.org/3rd_culture/wilson03/wilson_print.html [Someone should come up with a similar approach for economics, preferably at the high school level. --LW] ____________________________________________________________ Thought du jour: nature, nurture and chance Identical twins reared together, who share not only their genes but most of their environment, are imperfectly correlated in personality measures like extroversion and neuroticism. The correlations, to be sure, are much larger than those for fraternal twins or unrelated people, but they are seldom greater than .5. This tells us there is an enormous role for chance in the development of a human being. Steven Pinker, "Better babies? Why genetic enhancement is too unlikely to worry about", The Boston Globe, 1 June 2003, p. D1. [Professor Pinker is author of _The Blank Slate: The Modern Denial of Human Nature_.] ____________________________________________________________ Thought du jour: ancient gods of the Greeks and Romans textApplet: False The Greco-Roman Gods were quite morally deficient. They were thought to do terrible things to one another and to humans as well -- sometimes merely for amusement. And while they were quite apt to do wicked things to humans if they failed to propitiate them, the Gods had no interest in anything (wicked or otherwise) humans might do to one another. Instead, the Greek and Roman Gods concerned themselves only with direct affronts. For example, no religious sanctions were incurred by young women who engaged in premarital sex unless they immersed themselves in sacred waters reserved for virgins. Rodney Stark, "Why Gods Should Matter in Social Science", The Chronical Review, 6 June 2003. ____________________________________________________________ Thought du jour: the high cost of HIV/AIDS Many economists have argued that research expenditures on AIDS are excessive given its relatively small case load. However, few diseases have caused as much behavioral change as AIDS in terms of foregone sex which, if we were to believe biologists, is perhaps the most valued human activity. Thomas Pilipson, "Economic epidemiology and infectious diseases", NBER Working Paper 7037, March 1999, p. 5. ____________________________________________________________ Thought du jour: direct democracy The commercial market is a continuous referendum in which voters make decisions every day. It has the great advantage over the political market place that, minority tastes can be taken into account, and different citizens can buy different combinations to suit their individual preferences. .... .... In most western countries people elect representatives, or rulers, who make decisions on their behalf. But with modern electronics, it would certainly be possible to have frequent direct citizen voting, as was usual in the Assembly of Ancient Athens where the word "democracy" was first coined. The frank reason for being suspicious of frequent referenda is that people lack the knowledge to decide on complex issues. .... There is another more subtle consideration. Citizens voting on each issue separately will be tempted to vote for expensive government services without necessarily being willing to pay the taxes required to finance them. The voter does not face the same budget constraint in the ballot box as he does in running his own household. Samuel Brittan, "When the people should decide", Financial Times 06/06/03. http://www.samuelbrittan.co.uk/text153_p.html ____________________________________________________________ Thought du jour: poverty, education and terrorism There are many good reasons to improve education and reduce poverty in poor countries. Alas, reducing terrorism is probably not one of them. Alan B. Krueger and Jitka Malecková, "Seeking the Roots of Terrorism", The Chronicle Review, June 6, 2003 ____________________________________________________________ Thought du jour: James Tobin, author of the Tobin tax The global anti-globalisation movement thought for one brief moment that they had found an ally in the author of the Tobin tax. They were soon to be disappointed. Tobin was sceptical of the benefits of international financial integration in a world with multiple currencies, but he was a strong supporter of free trade and multilateralism. He favoured government assistance to the losers in the trade liberalisation process, but with the support designed to assist the reallocation of resources from dead-end industries towards viable new uses, rather than to subsidize the continued use of resources in non-viable industries. Tobin forcefully repudiated the anti- globalisation mantra of the Seattle crowd and distanced himself quite emphatically from the enemies of trade liberalisation, globalisation and the open society. WILLEM H. BUITER, "James Tobin: An Appreciation of his Contribution to Economics", NBER Working Paper No. W9753 (June 2003), pp. 27-28. www.nber.org [Nobel Laureate James Tobin died on March 11, 2002 at the age of 84.] ____________________________________________________________ Thought du jour: two extremes of researchers [A]t one extreme you’ve got excessive reductive types who are quantifying the number of blades of grass per hour that their species eats, and do time budget analyses as a function of the thickness of the ozone layer and their papers are total hard-ass science: it’s math and it’s equations, and often horrendously boring, at least to me. At the other extreme you have the people who have no idea how to do any quantitative science and they come back with the most amazing observations of stuff that strikes home. You’ve got cultural transmission and you’ve got tool use and you’ve got what appear to be psychiatric disorders and primates’ grief..., but all in this really unscientific framework. And each camp is utterly contemptuous of the other. In terms of the two extremes, I'll just be nice enough to say that the reductionists tend to be behavior ecologist types, people who get in the pattern of counting numbers of leaves .... Then there's the "Oh, my God, these people have no numbers in their papers except the page numbers and the volumes, but what they're doing is interesting". "A BOZO OF A BABOON: A Talk with Robert Sapolsky", Edge, 5 June 2003. [ROBERT SAPOLSKY is a professor of biology at Stanford University and of neurology at Stanford's School of Medicine. For twenty-three years he has made annual trips to the Serengeti of East Africa to study a population of wild baboons. His latest book is _A Primate's Memoir_.] ____________________________________________________________ Thought du jour: a petition of the candle makers, etc. When a product -- coal, iron, wheat, or textiles -- comes to us from abroad, and when we can acquire it for less labour than if we produced it ourselves, the difference is a gratuitous gift that is conferred up on us. The size of this gift is proportionate to the extent of this difference. It is a quarter, a half, or three-quarters of the value of the product if the foreigner asks of us only three-quarters, one- half, or one-quarter as high a price. It is as complete as it can be when the donor, like the sun in providing us with light, asks nothing from us. The question, and we pose it formally, is whether what you desire for France is the benefit of consumption free of charge or the alleged advantages of onerous production. Make your choice, but be logical; for as long as you ban, as you do, foreign coal, iron, wheat, and textiles, in proportion as their price approaches zero, how inconsistent it would be to admit the light of the sun, whose price is zero all day long! Frédéric Bastiat (1801-1850), "A PETITION From the Manufacturers of Candles, Tapers, Lanterns, sticks, Street Lamps, Snuffers, and Extinguishers, and from Producers of Tallow, Oil, Resin, Alcohol, and Generally of Everything Connected with Lighting", 1845. http://bastiat.org/ [The petition was for protection from ruinous competition of the sun, by legislating that everyone close their curtains and blinds, to darken homes and create a demand for artificial lighting. --LW] ____________________________________________________________ Thought du jour: rational behaviour Economists will and should be ignored if we continue to insist that it is axiomatic that constantly trading stocks or accumulating consumer debt or becoming a heroin addict must be optimal for the people doing these things merely because they have chosen to do it. Ted O'Donoghue and Matthew Rabin, "Studying optimal paternalism, illustrated by a model of sin taxes", American Economic Review, May 2003, p. 186. ____________________________________________________________ Thought du jour: the bubbly stock market The big rise in the stock market is definitely telling us something. Bulls think it says the economy is about to take off. But I think it's a sign that America is still blowing bubbles -- that a three-year bear market and the biggest corporate scandals in history haven't cured investors of irrational exuberance yet. Or, to put it another way: it's hard to find any real news to justify the market's leap. Instead, investors seem to be buying stocks because they are rising -- which is pretty much the definition of a bubble. Paul Krugman, "Still Blowing Bubbles", New York Times, 20 June 2003. ____________________________________________________________ Thought du jour: fines vs. imprisonment [I]mprisonment and fining may convey very different moral messages. While imprisonment unambiguously conveys the message that the norm violator conducted morally wrongful acts, fining people may transform norm violations into a kind of market transaction. .... It may ... be wise ...also for the society as a whole to limit the interaction of norm violators and norm followers to a minimum. E. Fehr and A. Falk, "Psychological foundations of incentives", European Economic Review 46 (2002), p. 711 and footnote 18. ____________________________________________________________ Thought du jour: of what value is a PhD outside the academy? Quite a few newly-minted humanities Ph.Ds have found that their degree is an active impediment to seeking employment outside the academy. Even if the job-seeker is willing to start in an entry-level position, potential employers often feel that is inappropriate for someone with a doctorate--but that person often also lacks any experience that would qualify them for more advanced jobs. Timothy Burke, "Monastery or the Market?", 21 May 2003. http://www.swarthmore.edu/SocSci/tburke1/ [This seems broadly true also for social science PhDs. --LW] ____________________________________________________________ Thought du jour: the uncertain case for currency union Europe contains a number of different-sized currency areas that, as with the US, coincide with national borders. If the currency-area effect were so important, one would expect larger European countries to be richer than their smaller neighbours. I know of no evidence for this. I agree that the US would be poorer with 50 currencies instead of one. I agree also that recent research has provided greater support for the existence of long-term benefits from the euro. But the magnitude of those advantages remains uncertain. The case for [UK] entry is not clear and unambiguous. That is so today. It will remain so a year hence. Martin Wolf, "The uncertain lesson of US currency union", Financial Times, 23 June 2003, p. 19. ____________________________________________________________ Thought du jour: economic growth, poverty and inequality After the methodological dust has settled, the overall picture on global growth, poverty, and inequality that emerges from the debate between Bhalla and the Bank seems fairly clear. Per capita income and consumption growth in the past two decades has been close to zero in all regions of the developing world except Asia, which has grown very quickly. Because Asia housed more than three-fourths of the world’s poor, the world poverty rate has fallen substantially.... For the same reason, world individual income distribution has probably improved. Jeromin Zettelmeyer, "Bhalla versus the World Bank: an outsider's perspective", Finance and Development 40:2, June 2003. http: //www.imf.org/external/pubs/ft/fandd/2003/06/pdf/books.pdf [Zettelmeyer, a Senior Economist at the IMF, is reviewing Surjit Bhalla's book _Imagine There's No Country--Poverty, Inequality and Growth in the Era of Globalization_ (IIA, Washington, DC, 2002).] ____________________________________________________________ Thought du jour: obesity [The common man] is, at heart, ... the good savage whose innate decency was subverted by social influences such as giant food companies. Left to his own devices, the denizen of hamburger restaurants would eat fresh carrots and brown rice, his natural choices. He wouldn't want the horrible muck provided by fast food chains and processed food companies. This picture is of a world in which humanity as a whole is good, but is so innocent that it is diverted from the paths of righteousness by a few evilly disposed persons such as the directors of food companies. .... Alas, reality is less flattering to our self-esteem. In Britain, the second fattest country in the world after the United States, about half of households do not have a dining table. Many young people never learn to eat in a social way: .... People eat when they feel so inclined, by finding whatever there happens to be in the fridge and by heating it up .... Theodore Dalrymple, "The devil's food cake made me do it", National Post, 5 July 2003. [Theodore Dalrymple is a British physician who works in an inner-city hospital.] ____________________________________________________________ Thought du jour: markets and good behaviour [B]ecause enforceable rights can never cover every margin of decision, opportunism in all relational contracting and exchange across time are costs, not benefits ...; an ideology of honesty means that people play the game of "trade", rather than "steal" .... Cultures that have evolved markets have enormously expanded resource specialization, created commensurate gains from exchange, and are wealthier than those that have not. This proposition says nothing about the necessity of human selfishness--the increased wealth of particular individuals can be used for consumption, investment, [charity, or] to pay taxes .... Markets economize on the need for virtue, but do not eliminate it. Vernon L. Smith, "Constructivist and ecological rationality in economics" (2002 Nobel Lecture), American Economic Review, June 2003, p. 466. ____________________________________________________________ Thought du jour: corruption Russian society is one where government officials see their reward from their positions as being the privilege to use their authority to extract income from the private persons with whom they come into contact. Private persons come to expect to have to pay government officials. The outcome is a society where corruption becomes part of the social norms of everyday life. Such a society is a continuation from past norms of behavior that existed in Soviet times, and indicates absence of change in the basic principles of conduct. Mark Levin and Georgy Satarov, "Corruption and institutions in Russia", European Journal of Political Economy 16 (2000), pp. 113-132 (the quote is from p. 130). [Sadly, this could accurately describe other societies in the world today. Mexico comes to mind, with its tradition of 'mordida'. --LW] ____________________________________________________________ Thought du jour: the limits of US military strength [I]f the US attempts to achieve its goals through a militarised foreign policy that scorns both the views of its allies and the role of global institutions, it will fail. And that would be a tragedy, not just for the US but for the world. Martin Wolf, "Supremacy is not enough to remake the world order", Financial Times; July 9, 2003, p. 19. ____________________________________________________________ Thought du jour: anti-globalisation prose In recent years leftist academics have been enraptured by Empire, a 500-page anti-globalization book by Michael Hardt and Antonio Negri, published in 2000. Empire collects all possible criticisms of free trade and wraps them in prose like this: "In the logic of colonialist representations, the construction of a separate colonized other and the segregation of identity and alterity turns out paradoxically to be at once absolute and extremely intimate." To commit a sentence like that is to subtract from the sum of human knowledge. But it is not really exceptional, and its authors are much admired for their fresh version of leftist "thinking." Robert Fulford, "They should know better: Humanities scholars spend lots of time reading, so why can't they write?", National Post, July 15, 2003. [I had to look up 'alterity'. The OED defines it as "the state of being other or different; diversity, ‘otherness.’" It is not included in my copy of the Concise OED. --LW] ____________________________________________________________ Thought du jour: capitalism and freedom [Capitalism] is portable: capitalism can work in South Korea, it can work in Taiwan, it can work in Chile, it can work in Israel, it can work in Ireland. The best thing about capitalism for my purposes is its political and social effects. It creates a body of people independent from the state power. People like to talk about civil society, and that is great, but what you need is something that can stand up to organized state authority. The only things that have been able to do that are the Church and capitalism. Fareed Zakaria, "Illiberal democracy five years later", interview published in HARVARD INTERNATIONAL REVIEW, Summer 2002. http://www.fareedzakaria.com/interviews/hir.html [Fareed Zakaria is Editor of Newsweek International and author of _The Future of Freedom: Illiberal Democracy at Home and Abroad_ (Norton, NY, 2003). ____________________________________________________________ Thought du jour: Stalin We are only just beginning to grasp the true nature of Stalin's power. .... Stalin's court was not unlike that of Ivan the Terrible. Stalin was a voracious reader of history books and he consciously modelled himself on the 16th-century Tsar. He built up his own elite of henchmen - not unlike Ivan's oprichnina - to undermine the old political establishment. He gave them flats and dachas, cars and chauffeurs, to buy their gratitude. And every year he murdered some of them to keep the others on their toes. Orlando Figes, "Up the greasy pole of terror", telegraph.co.uk, 14 July 2003. ____________________________________________________________ Thought du jour: Russian drinking [For Russian males,] drinking begins in earnest at ages 20- 24 and climbs steadily to a peak between ages 30 and 39, before decreasing slightly in the 40-44 and 45-49 year-old age groups. From age 50 onward, the frequency of drinking declines significantly. However, many Russian men are dead by their mid to late 50s. W.C. Cockerham, "Health lifestyles in Russia", Social Science and Medicine 51 (2000), pp. 1318-1319. ____________________________________________________________ Thought du jour: moral despair in Russia [A] society of 145 million people stretching across almost one-seventh of the land surface of the planet remain mired in poverty, despair and a moral squalor even more devastating than their physical one. Russia's population continues to implode with soaring death rates and plummeting birth rates. The underlying reason for this, far more than the collapse of living standards in the 1990s was ... that most of those people had lost all hope. They now despaired of things ever getting better. Martin Sieff, reviewing David Satter's _Darkness at Dawn: The Rise of the Russian Criminal State_ (Yale University Press, 2003), which he describes as "vivid, impeccably researched and truly frightening". United Press International, Washington, 23 May 2003. ____________________________________________________________ Thought du jour: Italian paradoxes [P]aradoxes abound in Italian society and culture, which can be characterized as conservative yet stylish and capable of great inventiveness and innovation; respectful of intellectuals, who often play a prominent role in public life, yet with the tackiest popular culture and the worst mass media imaginable; family oriented but with the lowest birth rate in Europe; attracted ideologically and philosophically to idealism, yet crassly consumerist and materialistic; hard-working and meritocratic but in many sectors inefficient and riven by incompetence, patronage and nepotism; parochial in its _companalismo_ though traditionally a country of mass emigration and strongly pro the European Union; Catholic while pronouncedly secular in many of its social values, not least regarding divorce and abortion. Richard Bellamy, "An Armani world", TLS, 2 May 2003, p. 6. ____________________________________________________________ Thought du jour: economists exit the White House The White House Council of Economic Advisers, now under the amiable leadership of Harvard's Gregory Mankiw, is moving out of the - er - White House. Its new home will be a nice suite of offices somewhere near the Starbucks and the mobile phone shop on G Street, a comfortable 400 yards from anyone in a position of political power. From there Mr Bush will not be able to hear the howls of economic anguish when he proposes his next tax cut or import tariff or agricultural subsidy. One day, as the dollar slides further and the fiscal deficit expands, Mr Bush will need some serious economic thinkers around him. But by then, there will be none left. There is only one answer. It is time to put Donald Rumsfeld in charge of economics. It would not necessarily do much for economic policy. But it would work wonders for foreign policy. "Exit Economists", Financial Times editorial, May 19, 2003, p. 16. ____________________________________________________________ Thought du jour: H Simon on income distribution Externalities, positive and negative, are woven through the whole fabric of society. They are important determinants of the rewards that individuals receive, thereby vitiating the basic libertarian argument that the state has no right to interfere with those rewards. What determines poverty or affluence? What information about a newborn child will best predict the level of comfort it will attain as an adult? First, its decade of birth, second its native land, third the status of its family. By any reasonable theory of causation, these largely explain why very many of us in twentieth- century America or Sweden are affluent, and why most people in China and India are poor. We were born at the right or wrong time and place, in families that could or could not give us a head start in the race. ... If we believe, nevertheless, that the state should exercise great restraint in redistributing rewards, it must be because the prospect of redistribution may weaken people's motivation to produce, not because redistribution is ethically "unfair". Herbert A. Simon, _Reason in Human Affairs_ (Stanford University Press, 1983), pp. 77-78. [Herbert Simon, who recently passed away, earned academic degrees in political science, but taught computer science and psychology. He received the Nobel Prize in Economics in 1978 "for his pioneering work on decision-making processes in economic organisations".] ____________________________________________________________ Thought du jour: self-control and individualism Reliance on a community for personal self-control was evident in medieval times even in Europe, where the law held small groups to be responsible for the behaviour of each member; but since then, people have shown a consistent taste for escaping the intrusiveness of intimate groups. The history of Western society has been a relentless march toward individual autonomy and privacy, and away from collective action at the neighbourhood level (p. 158) As early as the 1800s in New York City, dwellers of adjoining row houses might never talk to each other over a period of decades (end note 27, p. 222). George Ainslie, _Breakdown of Will_ (Cambridge University Press, 2001). ____________________________________________________________ Thought du jour: Cuba The hideously depressing thing is that Cuba under Batista-- Cuba in 1957--was a developed country. Cuba in 1957 had lower infant mortality than France, Belgium, West Germany, Israel, Japan, Austria, Italy, Spain, and Portugal. Cuba in 1957 had doctors and nurses: as many doctors and nurses per capita as the Netherlands, and more than Britain or Finland. Cuba in 1957 had as many vehicles per capita as Uruguay, Italy, or Portugal. Cuba in 1957 had 45 TVs per 1000 people--fifth highest in the world. Cuba today has fewer telephones per capita than it had TVs in 1957. You take a look at the standard Human Development Indicator variables--GDP per capita, infant mortality, education--and you try to throw together an HDI for Cuba in the late 1950s, and you come out in the range of Japan, Ireland, Italy, Spain, Israel. Today? Today the UN puts Cuba's HDI in the range of Lithuania, Trinidad, and Mexico. (And Carmelo Mesa- Lago thinks the UN's calculations are seriously flawed: that Cuba's right HDI peers today are places like China, Tunisia, Iran, and South Africa.) Thus I don't understand lefties who talk about the achievements of the Cuban Revolution: "...to have better health care, housing, education, and general social relations than virtually all other comparably developed countries." Yes, Cuba today has a GDP per capita level roughly that of-- is "comparably developed"--Bolivia or Honduras or Zimbabwe, but given where Cuba was in 1957 we ought to be talking about how it is as developed as Italy or Spain. Brad DeLong, "Let's Get Even More Depressed About Cuba" Posted May 14, 2003 10:46 PM. For the full post, and many, many comments, go to: http://www.j-bradford- delong.net/movable_type/2003_archives/001473.html Here are just two of the comments you will find there: Give over. Cuba in 1957 was a developed narcostate. When you compare it with Italy and Spain, are you really suggesting that Italy and Spain would have developed to where they are today if their only industries had been basic agriculture, plus the provision of cocaine and casino services to Germany and France? Posted by: dsquared on May 14, 2003 11:15 PM Well Monte Carlo hasn't done too badly, D^2. But I suppose it doesn't have the agriculture. Posted by: Matthew on May 15, 2003 04:40 AM ___________________________________________________________ Thought du jour: Marx on the state In the end, Marx could not admit that it really mattered whether the state was or was not controlled by the ruling class. It had to act in its interest regardless. It made little odds whether the state was directed by true representatives of their class like Casimir-Périer and Guizot, Peel and Cobden, or by a classless adventurer like Louis Bonaparte, not to speak of men like Castlereagh or Melbourne in England, Roon or Bismarck in Prussia or Schwarzenberg in Austria-Hungary, who had little time for bourgeois concerns. Any state, it would seem, would do. Any state could be relied on to do what was good for capitalism. Anthony de Jasay. _The State_ (Library of Economics and Liberty, 1998), part I, chapter 6. http://www.econlib.org/library/LFBooks/Jasay/jsyStt6.html ___________________________________________________________ Thought du jour: David Romer on mandatory classes [I]n deciding whether to go to class, students are deciding whether to incur a current cost in return for a distant and uncertain benefit. Individuals may not be fully rational in making this kind of intertemporal tradeoff. There is overwhelming evidence that not only humans but also many kinds of animals make systematically time-inconsistent choices. They act today as though they do not have strong preferences between consumption in two adjacent periods in the distant future; but when the time comes, they act as though they have a strong preference for consumption in the first period rather than the second (see for example Ainslie, 1992). David Romer, defending mandatory class attendance, in the Journal of Economic Perspectives 8:3 (Summer 1994), p. 215. [The reference is to psychiatrist George Ainslie's _Picoeconomics_ (Cambridge University Press, 1992).] ___________________________________________________________ Thought du jour: the guillotine Under the old regime, the luxury of decapitation, usually by the sword, was strictly reserved for the nobility; one of the Assembly's first decisions, prompted by the eponymous Dr Guillotin, was that this boon should be extended to all Frenchmen regardless of birth. .... Inaugurated on April 25, 1792, for the execution of the armed robber Nicolas-Jacques Pelletier, the guillotine had begun its 189-year career. .... Its worst abuse occurred not in 1790s Paris, but in Nazi Germany. The guillotine claimed just under 3,000 French lives in Paris during the Terror, but 10,000 German ones in 1944 and 1945 alone. In this area, as in so many others, Hitler was a far greater Terrorist than Robespierre. Munro Price , "The kindest cutter of all", 20/04/2003, review of _Guillotine: The Timbers of Justice_ by Robert Frederick Opie. ___________________________________________________________ Thought du jour: popular participation and government Ordinary people do not want a say in how hospitals are run, any more than they want a say in how their supermarket is run. Their aspiration is that the hospital, like the supermarket, delivers the goods and services they want. Today,[in the UK], that aspiration is met by the pluralist supermarket but not by the centrally directed hospital. John Kay, "Bedpans should be heard no more in Whitehall", Financial Times, 8 May 2003. [If this statement is true, then popular participation --in schools, hospitals or other public institutions-- is valuable only if it results in improved services _and_ if the resulting improvement is valued more than the subjective cost to citizens of their unpaid time and effort. --LW] ___________________________________________________________ Thought du jour: rational choice and scope of government Rational choice theory lies at the heart of not only modern microeconomic theory but also political doctrines that advocate minimal government --libertarianism and anarchism, for example. The idea is that, insofar as people behave rationally, they should be left to their own devices, except when collective behavior undermines individual interest, as when maximizing fishers overfish the waters or each individual decides that someone else should do a particular job, like serve in the army or build a road. But suppose people fundamentally and individually misbehave, as the evidence indicates they do. Then we would expect government to take account, not just of the defects of collective action, but of individual action as well, as David Hume (1777) said more than 200 years ago. As old as it is, the idea remains unexplored and revolutionary, and it defines a conceptual frontier that students of the experimental analysis of behavior are uniquely well qualified to cross. Richard J. Herrnstein, "Rational choice theory: necessary but not sufficient", _American Psychologist_, vol 45 (1990), pp. 356-357. [ Harrison (1930-1994) was professor of psychology at Harvard University.] ___________________________________________________________ Thought du jour: political and economic liberalism [A] distinction [is] frequently drawn on the Continent ... between political and economic liberalism .... For the British tradition the two are inseparable because the basic principle of the limitation of the coercive powers of government to the enforcement of general rules of just conduct deprives government of the power of directing or controlling the economic activities of the individuals, while the conferment of such powers gives government essentially arbitrary and discretionary power .... F. A. Hayek, "Liberalism", written in 1973 for the Italian _Enciclopedia del Novicento_ and reprinted as Chapter Nine of _New Studies in Philosophy, Politics, Economics and the History of Ideas_. http://www.angelfire.com/rebellion/oldwhig4ever/ ___________________________________________________________ Thought du jour: shrinking liberals At present the defenders of the classical liberal position have ... shrunk to very small numbers, chiefly economists. And the name 'liberal' is coming to be used, even in Europe, as has for some time been true of the USA, as a name for essentially socialist aspirations, because, in the words of J. A. Schumpeter, 'as a supreme but unintended compliment, the enemies of the system of private enterprise have thought it wise to appropriate the label'. F. A. Hayek, "Liberalism", written in 1973 for the Italian _Enciclopedia del Novicento_ and reprinted as Chapter Nine of _New Studies in Philosophy, Politics, Economics and the History of Ideas_. http://www.angelfire.com/rebellion/oldwhig4ever/ ___________________________________________________________ Thought du jour: self-control If you are one of the vast majority of people who think they are saving too little of their income for retirement, the natural conclusion is that you have self-control problems. If, in addition, you argued to yourself that saving more today would only lead to spending more tomorrow, and thus there is no point in saving for retirement, at least there is a small consolation: you are a _sophisticated_ decisionmaker with self-control problems. And self-control problems can extend beyond savings decisions. A thirty-something Italian one of us met in Prague, had decided that it wasn't worth looking for a job anymore, because even if he got himself to do it and found one, he would quit shortly thereafter, anyway. It is exactly these kinds of agents our paper is mostly concerned with: people who have self- control problems but realize this and behave according to it. Peter Diamond and Botond Koszegi, "Quasi-Hyperbolic Discounting And Retirement", MIT Dept. of Economics Working Paper No. 00-03 (January 2000). http://papers.ssrn.com/sol3/delivery.cfm/000522314.pdf? abstractid=229497 ___________________________________________________________ Thought du jour: must institutions have official views? Our purest knowledge institutions such as universities do not have Official Views on the questions of the day. There is no official Harvard or MIT view on the controversies that rage in the natural, life, and social sciences. That was not always so. The knowledge institutions of the Middle Ages had Official Views on questions about the physical, biological, and social nature of the world. Open and critical discussion of these dogmas was hardly encouraged, there was no open "clash of adverse opinions" and no free market in ideas--and knowledge accordingly stagnated. Today the norm in universities (not always realized) and in the fields of science is a tolerance of reasoned and evidenced views without the institutions themselves taking official stands. When organizations do take stands, the results are typically dismal, e.g., the Soviet theory of genetics or the University of Utah theory of cold fusion. David Ellerman, "Must the World Bank have Official Views?", February 2000. http://www.ellerman.org/Memos/Official%20Views.pdf [D. Ellerman was adviser and occasional speechwriter for Joe Stiglitz at the World Bank. He is now retired.] ___________________________________________________________ Thought du jour: Coase discovers the magic of markets Arnold Plant ... was appointed Professor of Commerce (with special reference to Business Administration) at the London School of Economics in 1930. ... [W]hat he said in his seminar ... was to change my view of the working of the economic system, or perhaps more accurately was to give me one. What Plant did was to introduce me to Adam Smith's "invisible hand". He made me aware of how a competitive economic system could be coordinated by the pricing system. But he did not merely influence my ideas. My encountering him changed my life. [Thanks to Plant, Coase became an economist, and was awarded the Nobel Prize in 1991.] Ronald Coase, "Autobiography", 1991. http://www.nobel.se/economics/laureates/1991/coase- autobio.html ___________________________________________________________ Thought du jour: liberal democracy For all their flaws, liberal democracies appear to be the best form of large-scale social organization our sorry species has come up with so far. They provide more comfort and freedom, more artistic and scientific vitality, longer and safer lives, and less disease and pollution than any of the alternatives. Modern democracies never have famines, almost never wage war on one another, and are the top choice of people all over the world who vote with their feet or with their boats. Steven Pinker, _The Blank Slate: The Modern Denial of Human Nature_ (Viking Penguin, New York, 2002), p. 296. ___________________________________________________________ Thought du jour: collectivism vs reciprocity The real alternative to romantic collectivism is not "right- wing libertarianism" but a recognition that social generosity comes from a complex suite of thoughts and emotions rooted in the logic of _reciprocity_. That gives it a very different psychology from the communal sharing practiced by social insects, human families, and cults that try to pretend they are families. Steven Pinker, _The Blank Slate: The Modern Denial of Human Nature_ (Viking Penguin, New York, 2002), p. 255. ___________________________________________________________ Thought du jour: sex and famine People may have sex in private for the same reason that people during a famine eat in private: to avoid inciting dangerous envy. Steven Pinker, _The Blank Slate: The Modern Denial of Human Nature_ (Viking Penguin, New York, 2002), p. 254 ___________________________________________________________ Thought du jour: humans as a "small" species Geneticists call us a "small" species, which sounds like a bad joke given that we have infested the planet like roaches. What they mean is that the amount of genetic variation found among humans is what a biologist would expect in a species with a small number of members. There are more genetic differences among chimpanzees, for instance, than there are among humans, even though we dwarf them in numbers. Steven Pinker, _The Blank Slate: The Modern Denial of Human Nature_ (Viking Penguin, New York, 2002), pp. 142-143. ___________________________________________________________ Thought du jour: paying the cost of racial preferences One defect of affirmative action is that, at present, the poorest and least- advantaged non-minority applicants bear most of the costs. If we are going to have preferential treatment for minorities, the burden should be shared by all. University spaces preferentially allocated to minorities should be taken from those at the top of the applicant pool as well as at the bottom. The son of a Harvard professor is better equipped than the daughter of a blue-collar worker to cope with losing a seat at a top university because of affirmative action. Yet America's well- bred well-educated classes tend to assuage their guilt by making those below them pay. Mike Berline of San Francisco, letter to the editor, The Economist, 18 April 2003. www.economist.com [Even worse, there is affirmative action for children of America's elite. George W. Bush benefited from this policy at Yale. -- LW] ___________________________________________________________ Thought du jour: Marx and the State In the end, Marx could not admit that it really mattered whether the state was or was not controlled by the ruling class. It had to act in its interest regardless. It made little odds whether the state was directed by true representatives of their class like Casimir-Périer and Guizot, Peel and Cobden, or by a classless adventurer like Louis Bonaparte, not to speak of men like Castlereagh or Melbourne in England, Roon or Bismarck in Prussia or Schwarzenberg in Austria-Hungary, who had little time for bourgeois concerns. Any state, it would seem, would do. Any state could be relied on to do what was good for capitalism. Anthony de Jasay. _The State_ (Library of Economics and Liberty, 1998), part I, chapter 6. http://www.econlib.org/library/LFBooks/Jasay/jsyStt6.html ___________________________________________________________ Thought du jour: wisdom and age All of us are ignorant, if not misinformed, on vast numbers of things. What makes experts different is that they dare not admit it. That is also what makes experts dangerous. .... While it is true that you learn with age, the down side is that what you learn is often what a damn fool you were before. Thomas Sowell, "Random thoughts on the passing scene", Jewish World Review, April 14, 2003. http://www.jewishworldreview.com/cols/sowell.html ___________________________________________________________ Thought du jour: small enterprise in India India continues to be held back by government protection of small-scale industries. By depriving companies that grow above a certain size of access to cheap capital and other subsidies, it penalises those that are successful. The number of sectors qualifying for such protection is falling slowly, although it is still more than 700. But such constraints are increasingly troublesome as India dismantles its protectionist barriers. Martin Wolf and Edward Luce, "India's slowing growth", Financial Times, 4 April 2003. ___________________________________________________________ Thought du jour: economic experiments with rats Failure to respond to the cue [signaling future price increases] is attributable to a number of possible causes. First, and most likely, the cue may not have been interpreted as a signal of future price change. ... The subjects did show an awareness to the cue, noted by sniffing and rearing toward it, but this in no way suggests that it was understood. .... Our future research will spend more time training rats to understand future price change signals. J. K. Sarbaum, S. W. Polachek and N. E. Spear, "The Effects of Price Changes on Alcohol Consumption in Alcohol- Experienced Rats", NBER Working Paper No. W6443 (March 1998), pp. 27, 28-29. [No, I did not make this up. This is serious research, financed by the prestigious National Bureau for Economic Research (NBER). -- LW] ___________________________________________________________ Thought du jour: going on-line "Many in our countries are concerned, not so much with how to go on-line, as how to go on living." Member of the Second Session of the Committee of Experts on Public Aministration, New York, 8 April 2003, in response to a presentation on e-government by the Chief of the Knowledge Management Branch of DPADM. [I quote this from memory, so it may not be exact. --LW] ___________________________________________________________ Thought du jour: ownership of capital I have long thought that Karl Marx made the wrong criticism of privately owned wealth: it is surely not that it exists but that too few of us have it. The ownership of a little nest egg to tide people over bad luck, to avoid their becoming complete wage slaves and to give them some opportunity to opt out for a while from the rat race, was a privilege of the traditional middle classes celebrated in 19th-century novels. An extension of such privileges to all would be a far more revolutionary step than anything in the communist manifesto. Samuel Brittan, "Capital in the wallets of babes", Financial Times 10/04/03 http://www.samuelbrittan.co.uk/text145_p.html ___________________________________________________________ Thought du jour: global warming The findings [of a Harvard University team] prove that the world experienced a Medieval Warm Period between the ninth and 14th centuries with global temperatures significantly higher even than today. They also confirm claims that a Little Ice Age set in around 1300, during which the world cooled dramatically. Since 1900, the world has begun to warm up again - but has still to reach the balmy temperatures of the Middle Ages. .... Dr Philip Stott, the professor emeritus of bio-geography at the University of London, told The Telegraph: "What has been forgotten in all the discussion about global warming is a proper sense of history." Robert Matthews, "Middle Ages were warmer than today, say scientists", Daily Telegraph, 8 April 2003. ___________________________________________________________ Thought du jour: the American empire No one could deny the extent of the American informal empire - - the empire of multinational cooorporations, of Hollywood movies, and even of TV evangelists. Is this so very different from the early British empire of monopoly trading companies and missionaries? Nor is it any coincidence that a map showing the principal U.S. military bases around the world looks remarkably like a map of Royal Navy coaling stations a hundred years ago. Even recent American foreign policy recalls the gunboat diplomacy of the British empire in its Victorian heyday, when a little trouble on the periphery could be dealt with by a short, sharp "surgical strike." The only difference is that today's gunboats fly. Niall Ferguson, "America: an Empire in Denial", The Chronical of Higher Education Review, 28 March 2003. http://chronicle.com/free/v49/i29/29b00701.htm [Ferguson is professor of financial history at New York University. His new book, _Empire: The Rise and Demise of the British World Order and Lessons for Global Power_ will be published next month by Basic Books.] ___________________________________________________________ Thought du jour: African studies [T]he most damaging legacy of colonialism and imperialism in the world has not been the global economic structures and relations it has left behind nor the patterns of modern 'neo-imperialist' economic and cultural relations of which it was the undoubted historical forerunner. Rather its most damaging legacy has been the psychological Siamese twins of endemic guilt on the European side and endemic psychological dependence on the African side, legacies which make truth telling hard and the adult taking of responsibility even harder. Imperialism fucked up the heads of so many people whom it touched - both colonialists and colonized (Frantz Fanon was absolutely and deeply right about that) and until that - ultimately depressing - legacy of its existence is finally killed, neither Africa nor African studies will be able to make real progress. Gavin Kitching,. "Why I gave up African studies", June 2000 http://www.arts.uwa.edu.au/MotsPluriels/MP1600gk.html ___________________________________________________________ Thought du jour: foreign aid This delightful little book should be required reading for all who work on poor countries. Reusse ... describes how the "techno- managerial elite" defines foreign aid through assessments of need, which can be met only by this same elite. The good ship Foreign Aid ferries gold in a never- ending round-trip between the aid organizations and the technocrats in the aid-recipient countries, without much opportunity for the intended beneficiaries to climb on board or influence direction. William Easterly, reviewing Eberhard Reusse, _The Ills of Aid: An Analysis of Third-World Development Policies_ (University of Chicago Press, 2002) in _Finance and Development_, March 2003, p. 52. http: //www.imf.org/external/pubs/ft/fandd/2003/03/books.htm#book1 [Eberhard Reusse has first-hand knowledge of projects administered by the UN Food and Agriculture Organisation (FAO), where he worked for many years. Easterly had a similar experience at the World Bank. --LW] ___________________________________________________________ Thought du jour: aid conditionality [T]here are local agents for local reform but they are all too often silenced. During Ghana's 2000 elections, private FM stations and independent newspapers played a critical role in ending the 20-year despotic reign of ex-president Jerry Rawlings. ... [T]he FM stations had, through their call-in shows, primed the people with unfiltered information and empowered them to participate in national debates. As New York Times columnist Thomas Friedman observed in May 2001, after covering Ghana's elections, "Let's make all aid, all IMF-World Bank loans, all debt relief conditional on African governments' permitting free FM radio stations. Africans will do the rest." It is a message the book should have sent to the World Bank [but didn't]. G. B. N. Ayittey, review of S. Devarajan, D. Dollar and T. Holmgren, _Aid and Reform in Africa_ (World Bank, 2001), in Journal of Economic Literature, March 2003, pp. 249-250. ___________________________________________________________ Thought du jour: the magic of markets If there is one thing that distinguishes economists from mere mortals, it is their understanding and admiration of how markets work. Since Adam Smith gave us the metaphor of the invisible hand, economists have reveled in its magic. For many of us, this insight was the first big "Aha!" moment in economics. Everyone who experiences it finds their politics moving at least slightly to the right, and for some it launches a career. N. Gregrory Mankiw, reviewing J. McMillan, _Reinventing the Bazaar: A Natural History of Markets_ (2002), in Journal of Economic Literature, March 2003, p. 256. ___________________________________________________________ Thought du jour: "The Onion" on Bush The Onion describes itself as "America's finest news source," and it's not an idle boast. On Jan. 18, 2001, the satirical weekly bore the headline "Bush: Our long national nightmare of peace and prosperity is finally over," followed by this mock quotation: "We must squander our nation's hard-won budget surplus on tax breaks for the wealthiest 15 percent. And, on the foreign front, we must find an enemy and defeat it." Paul Krugman, "Who Lost the U.S. Budget?", New York Times, 21 March 2003. ___________________________________________________________ Thought du jour: in praise of old folks [O]ld people offer many advantages to society as a whole while, unlike young people, they commit very few crimes, are scarcely ever violent and do not shout in the street or consider it amusing to attempt to sing and vomit at the same time. Steve McGiffen, "Ageing society no disaster", Financial Times, 13 March 2003. ___________________________________________________________ Thought du jour: the case for colonialism Slavery was to the British in the 19th century what terrorism is to the Americans in the 21st: a blight on the earth, fostered by renegades and despots, and an affront to civilisation. .... The slave trade was outlawed throughout the British dominions in 1834, and it was simultaneously decided that no one else should be allowed to practise it either. For the next 30 years the prime duty of the Royal Navy was to eradicate the slave trade on the high seas. By and large Britain did this duty alone. .... The Americans in particular, the hypocrites of their day, were more a hindrance than a help: they bleated about British ‘unilateralism’ and protested about the need for ‘international law’, while all the time her entrepreneurs were running their own slave ships between Africa and the Southern states. One thinks of the French, urging the ‘UN route’ while Total-Fina schemes to win Iraq’s oil contracts. Daniel Kruger, "The case for colonialism" The Spectator, 15 March 2003. ___________________________________________________________ Thought du jour: the French and the Americans The French have a word for it: "hyperpuissance," meaning the American tendency to throw its weight around in the matter of Iraq. The Americans, of course, have a joke. They have a lot of them. This one is usually attributed to Gen. Norman Schwartzkopf, US commander during the First Gulf War "Going to war without France," he says, "is like going deer hunting without your accordion." Economic Principals, 9 March 2003. www.economicprincipals.com ___________________________________________________________ Thought du jour: gains from trade Rich Ivy League student idealists who protest in the streets of Seattle do not understand the 21st century realities of freer trade and export-led miracles of emerging economy productivity growth. We can agree on that. However, it is my duty to remind the zealots for ever freer trade that the new winds of comparative advantage do not always or usually improve the lot of everyone. Paul A. Samuelson, "Pure theory aspects of industrial organization and globalization", _Japan and the World Economy_, Vol 15, Issue 1 (January 2003), pp. 89-90. ____________________________________________________________ Thought du jour: America's mission America is on a mission to bring democracy to the Arab world and save them from totalitarianism, much along the lines of its similar crusades in Latin America and SouthEast Asia. Posted to http://d-squareddigest.blogspot.com/ 27 February 2003. ____________________________________________________________ Thought du jour: neo-liberalism The enemy, says [Naomi] Klein, is "neo-liberalism." But what is a neo-liberal? I have never met one. People who believe in individual liberty and the merits of the market economy do exist. They are liberals. Theirs is, in its many variants, the shared creed of the west and intellectual victor of the cold war. Neo-liberalism is, to return the compliment, a neo- Marxist phantom. Martin Wolf, reviewing Naomi Klein's book "Fences and Windows" in Prospect Magazine, February 2003. ____________________________________________________________ Thought du jour: caring for introverts Do you know someone who needs hours alone every day? Who loves quiet conversations about feelings or ideas, and can give a dynamite presentation to a big audience, but seems awkward in groups and maladroit at small talk? Who has to be dragged to parties and then needs the rest of the day to recuperate? Who growls or scowls or grunts or winces when accosted with pleasantries by people who are just trying to be nice? If so, do you tell this person he is "too serious," or ask if he is okay? Regard him as aloof, arrogant, rude? Redouble your efforts to draw him out? If you answered yes to these questions, chances are that you have an introvert on your hands--and that you aren't caring for him properly. .... Introverts may be common, but they are also among the most misunderstood and aggrieved groups in America, possibly the world. I know. My name is Jonathan, and I am an introvert. .... Are introverts arrogant? Hardly. I suppose this common misconception has to do with our being more intelligent, more reflective, more independent, more level-headed, more refined, and more sensitive than extroverts. Also, it is probably due to our lack of small talk, a lack that extroverts often mistake for disdain. We tend to think before talking, whereas extroverts tend to think by talking, which is why their meetings never last less than six hours. [I saw a description of myself and many of my friends in this brief essay. The full text can be viewed at the link below. --LW] Jonathan Rauch, "Caring for Your Introvert: The habits and needs of a little-understood group" The Atlantic Monthly, March 2003. http://www.theatlantic.com/issues/2003/03/rauch.htm ____________________________________________________________ Thought du jour: literacy in Brazil Two- thirds of Brazilian workers (including the president himself) never completed their basic education. Despite big advances in the 1990s, the 2000 census found that 13% of Brazilian adults are totally illiterate ...--including 15 staff at the education ministry in Brasília, as Mr [Cristovam] Buarque, the new minister, was aghast to discover. Peter Collins, "A Survey of Brazil", The Economist, 22 Febr. 2003, p. 13. ____________________________________________________________ Thought du jour: Hal Varian on writing economics I hate to say it, but economist terminology is terrible. Economic jargon just doesn't convey much meaning to the average reader. "Rent" is a nice example. It's an important concept, no doubt about it, but your typical reader just won't understand the subtleties without a lot of explanation. "Profit" they understand (or at least think they do) and it's probably a better term in most cases. Hal Varian, "What I've Learned about Writing Economics", April 2001. http://www.sims.berkeley.edu/~hal/Papers/writing- economics.html ____________________________________________________________ Thought du jour: Alexander Gershenkron He [Gerschenkron] was an extraordinary scholar (and person) .... He was an exceptional reader, of good books and bad. In his own writings, his references were varied, and consciously intended to impress .... Nor did he exclusively write on economic history. There were his book reviews and other essays, including the one joint work -- with his wife -- on the adequacy of the diverse translations of Hamlet's quatrain to Ophelia in sixteen different languages. Albert Fishlow, "Alexander Gerschenkron: A Latecomer Who Emerged Victorious", a review essay for EH.NET, 15 February 2003. ____________________________________________________________ Thought du jour: Globalization and Its Discontents Joseph Stiglitz's controversial new book, Globalization and Its Discontents, is not an assault on globalization. As winner of the Nobel Prize in Economics, Stiglitz shares his professions' faith in international trade, corporate investment and the closer integration of national economies. Rather, Stiglitz is out to attack the International Monetary Fund, the U.S. Treasury Department and, more generally, right-wing market fundamentalism--for endangering globalization. Richard Feinberg, book review, Journal of Asian Economics 13: 6 (January 2003), pp. 895-897. ____________________________________________________________ Thought du jour: who should control large corporations? [T]here has been a crisis in the running of large corporations (I hate that horrible word governance). Events such as the Enron fiasco cannot be dismissed as being due to the few bad apples found everywhere. The root of the problem is the separation of ownership from management - or in modern economic jargon the principal agent problem. This has grown worse because of the decline of influential individual shareholders who align the longer term interests of owners and managers; and their replacement by essentially passive institutions who lack the incentive to hold corporate management accountable. .... The present corporation is certain to evolve. But the stakeholder idea is a step backwards. If it means anything, it is that managements should do something other than strive for the best return on their assets. .... The stakeholder approach is to promote a general mushiness. Everyone is supposed to pursue the interests of everyone and no one is really accountable for anything. A manager is theoretically responsible not only to shareholders, or even to workers, but to suppliers, customers and the public at large. This is no operational meaning. In practice it is simple a charter for management to do what is likes. Samuel Brittan, "Shareholders, not stakeholders" 6 Febr. 2003 http://www.samuelbrittan.co.uk/spee26_p.html ____________________________________________________________ Thought du jour: pro-choice, anti-choice Republicans usually oppose government regulation in the name of free choice. .... But on the most sensitive subject of all--reproductive rights-- conservatives are now on the side of government control. The Democrats are no more coherent: a party that will do anything to protect a woman's right to choose an abortion will not support her right to choose a ... school for her child. "The War That Never Ends", The Economist, 18 January 2003, p. 25. ____________________________________________________________ Thought du jour: spam It seems safe to assume that a sender named NoMoreConstipation68487 is a spammer. Likewise for Persondude1 -- but no, that turns out to be my 11- year-old nephew. Sorting the good from the bad looks easy, but it's a real problem, both for humans trying to manage their in-boxes and for artificial intelligence. James Gleick, "Tangled Up in Spam", NY Times Magazine, 9 February 2003. ____________________________________________________________ Thought du jour: solitude in the city Question: Why have you been so reclusive for the last decade? You've been in total silence until this book. Response: ... I finally started writing the novel that I never had the guts to start before. When I write, I need total concentration, solitude. Question: How can you live in the middle of Manhattan then? Response: Because New York is a city where you can live among millions of people without seeing any of them. Oriana Fallaci, interviewed by Asia Aydintasbas, New York Times Magazine, 2 February 2003, p. 17. [Oriana Fallaci, the noted Italian journalist, broke ten years of silence with _The Rage and the Pride_, a post-Sept. 11 critique of Islamic fundamentalism that became a best- seller in Italy.] ____________________________________________________________ Thought du jour: pension reform [W]ith the possible exception of war in Iraq, the current phenomenon which has most potential to effect the aggregate welfare of the developed English-speaking world, is the "reform" of pensions. ... [W]hen I use the word "reform" here, I mean it in its normal sense, the sense in which advocates of reform throughout the ages have used it. In other words, I am using "reform" as shorthand for "a disgraceful attack on the common man by those better off than himself, which is made to look less disgraceful by lying about it". Daniel Davies, posted to his web log on 16 December 2002. http://d-squareddigest.blogspot.com/ ____________________________________________________________ Thought du jour: editing the work of others Once asked to edit a misleading piece from the field at the time of the Vietnam war, he [Andrew Boyd] acidly refused, remarking that he was not in the business of polishing shit. Obituary of Andrew Boyd, foreign affairs editor on The Economist staff, 1951-1988, published in The Economist, 18 January 2003, p. 50. ____________________________________________________________ Thought du jour: on university teaching MY INTEREST in university teaching was initially aroused by the leisure it promised. "Every century has its cushy profession," the English poet Philip Larkin said. "It used to be the church. Now it’s academe." Larkin was right. Do the math: assuming one does not teach in the summer--and the vast majority of rofessors do not--college teaching is roughly a six- or seven- month job, and during those months one generally goes into the office two or three days a week. Not bad, not bad at all. Joseph Epstein, "Goodbye, Mr. Chipstein", Commentary, February 2003. http://commentarymagazine.com/epstein.htm ____________________________________________________________ Thought du jour: small people Keep away from people who try to belittle your ambitions. Small people always do that, but the really great make you feel that you, too, can become great. --Mark Twain {1835-1910 American WWWriter & Humorist} ____________________________________________________________ Thought du jour: why developing countries need the IMF The Consumer Price Index is estimated to have increased by about 27 per cent during the financial year 1980-81 .... In inflationary times, price controls have a particularly important role to play in ensuring that the consumer is protected. Consequently, there has been a further expansion in the scope of price control and the number of items subject to control has increased considerably .... Effective enforcement is the foundation on which price control must rest if it is to benefit the consumer. In this connection the re-organisation scheme designed to improve the effectiveness of the Enforcement Branch has been completed. Mauritius Minister of Finance, Budget Speech, 5 May 1981. [The Minister also spoke about monetary policy, explaining that he had recently raised interest rates on commercial credit "from 11¼ to 12½ per cent", but failed to note that, with prices inflating at 27 per cent, these rates were low, actually very negative in real terms. No, price controls, even with enhanced enforcement, did not work. Yes, Mauritius did turn to the IMF for help with economic stabilization, and the programme 'imposed' by IMF economists was a success.] ____________________________________________________________ Thought du jour: finance of higher education Nobody disputes that Britain's universities are in a mess. The proportion of young people going into higher education has risen from 5% to 35% over 40 years, but universities have not been provided with the money, or the means of raising it, to pay for the increase. The quality of research and teaching have therefore suffered. But the solution is much disputed. Should the money come largely out of tax revenue--as in Britain and most of the rest of Europe--or from students--as in America? A curious alliance of the left (which believes pretty much everything should be tax-financed) and the rich (who like their children's education being subsidised by poorer taxpayers) wants more tax money. The white paper goes the other way, and proposes charging students more--rightly, since they get most of the benefit. "Reforming British Universities", The Economist, 25 January 2003, p. 16. ____________________________________________________________ Thought du jour: the year 2023 During the 19th century, per-capita world income grew at maybe 0.5% a year. Last century that figure was about 1.5% per year, and world-income distribution worsened. But so far during the 21st century, per-capita world income has grown 3% per year, and for the first time world-income distribution has become more equal. But looking forward, almost everyone is uneasy. .... Nobody has confidence in world peace. At the end of the 19th century, Germany under Kaiser Wilhelm II had seen a ruling class fearful of democracy turn militaristic and seek foreign conquest. Today, China has failed to move toward democracy: So do we face a Wilhelmine China, with the Spratly Islands and Taiwan playing the role of Alsace and Lorraine? Or are we faced with a Weimar Russia or a Weimar India? And then there is the unfinished business of the Islamic Reformation ... J. Bradford Delong, The View From 2023: WSJ.Com Posted by DeLong on January 26, 2003 01:35 PM at http://www.j-bradford- delong.net/movable_type/archives/001488.html ____________________________________________________________ Thought du jour: food security in Mauritius Mr. H. Rossenkhan asked the Minister ... whether, in view of the fact that the recent cancellation of import licenses for powdered skimmed milk is causing great hardship to the poor, he will consider the advisability of reinstating those licenses. [Minister's response]: Skimmed milk powder in any form was recently placed on the list of restricted imports with a view of regulating the supply and sale of milk bearing in mind the need to stimulate the local production of cattle milk and to ensure its island-wide distribution in the most hygienic conditions. Until this objective is achieved, it will not be in the best interests of Mauritius to remove the present restrictions. Mauritius Legislative Assembly Debates, Third Session, Tuesday, 9th August 1966. [I found this in the Library of Congress while researching the subject 'universal pensions in Mauritius'. --LW] ____________________________________________________________ Thought du jour: universal health insurance These are my principal policy recommendations: 1. *Universal comprehensive [health] insurance*. .... The program should be universal because the best way of meeting the nation's responsibility to the poor is by integrating them into the same system covering the great mass of society. Another reason is that when care is provided only to those receiving less than a specified income, benefits are very difficult to administer and the system generates antisocial incentives. .... [Five more recommendations follow, but the first, in my opinion, is the most important. --LW] Victor R. Fuchs, Who Shall Live? Health, Economics, and Social Choice (Basic Books, NY, 1974), pp. 149-150. [Fuchs is citizen and resident of the United States, a country that, despite its great wealth, does not have a system of universal health care for children, nor for adults under the age of 65. --LW] ____________________________________________________________ Thought du jour: poverty I sometimes wonder whether there is any way of making poverty terribly infectious. If that were to happen, its general elimination would be, I am certain, remarkably rapid. Amartya Sen, "The political economy of targeting", in D. van de Walle and K. Nead (editors), Public Spending and the Poor (Johns Hopkins University Press, 1995), p. 21. ____________________________________________________________ Thought du jour: Utah and Nevada In the western United States there are two contiguous states that enjoy about the same levels of income and medical care and are alike in other respects, but their levels of health differ enormously. The inhabitants of Utah are among the healthiest individuals in the United States, while the residents of Nevada are at the opposite end of the spectrum. ... What ... explains these huge differences ....? The answer almost surely lies in the different life-styles of the residents of the two states. Utah is inhabited primarily by Mormons, who ... do not use tobacco or alcohol and in general lead stable, quiet lives. Nevada, on the other hand, is a state with high rates of cigarette and alcohol consumption and very high indexes of marital and geographic instability. Victor R. Fuchs, Who Shall Live? Health, Economics and Social Choice (Basic Books, 1974), p. 52, 53. ____________________________________________________________ Thought du jour: economists, romantics and technicians [T]he basic economic problem is how to allocate scarce resources so as to best satisfy human wants. This point of view may be contrasted with two others that are frequently encountered. They are the *romantic* and the *monotechnic*. The romantic point of view of view fails to recognize the scarcity of resources relative to wants. .... The monotechnic point of view, frequently found among physicians, engineers, and others trained in the application of a particular technology, is quite different. Its principal limitation is that it fails to recognize the multiplicity of human wants and the diversity of individual preferences. Victor R. Fuchs, Who Shall Live? Health, Economics and Social Choice (Basic Books, 1974), p. 5. Increasingly, inequalities of access and outcome characterize our world. These inequalities could be the focus of our collective action as engaged members of the healing and teaching professions, broadly conceived. We have before us an awesome responsibility--to prevent social inequalities from being embodied as adverse health outcomes. We have the technology. Paul Farmer, Infections and Inequalities: The Modern Plagues (UC Press, Berkeley, 1999), p. 282. [Paul Farmer manages to write not only from the monotechnic, but also from the romantic point of view. This perhaps reflects his dual training in medicine (MD) and anthropology (PhD). He does not acknowledge that there might be an economic point of view, so does not cite Fuchs or any health economist. --LW] ____________________________________________________________ Though du jour: medical technologies During their medical school and residency training, physicians are "imprinted" with what they understand to be "best medical practice," to which they try to conform throughout their careers. This can be a mixed blessing because it is closely related to what I have called the "technological imperative"-- namely, the desire of the physician to do everything that he has been trained to do, regardless of the benefit-cost ratio. Victor R. Fuchs, Who Shall Live? Health, Economics and Social Choice (Basic Books, 1974), p. 60. Can we, in good conscience, blame the failure to make new technologies available on our patients? Is the locus of blame to be found in the hearts and minds of the sick? .... In Haiti, the concept of "appropriate technology" is already regarded as a means of justifying the unfair partition of the world's wealth. Paul Farmer, Infections and Inequalities: The Modern Plagues (UC Press, Berkeley, 1999), p. 270. [Farmer is a trained physician with an MD.] ____________________________________________________________ Thought du jour: inequalities in health care Increasingly, inequalities of access and outcome characterize our world. These inequalities could be the focus of our collective action as engaged members of the healing and teaching professions, broadly conceived. We have before us an awesome responsibility--to prevent social inequalities from being embodied as adverse health outcomes. We have the technology. Paul Farmer, Infections and Inequalities: The Modern Plagues (UC Press, Berkeley, 1999), p. 282. [Farmer is a physician-anthropologist at Harvard Medical School.] Another new development, possibly temporary, is reversal of the long-term trend toward greater equality in health care. .... The argument that income should not determine "who shall live and who shall die" will carry less force than in the past for two reasons. First, it is becoming increasingly clear that life expectancy depends on many factors other than medical care, including occupation, diet, housing, and auto safety, and that individuals with higher income can clearly opt for life-extending choices in those areas. Second, an increasing proportion of medical care expenditures is likely to be directed toward improving the quality of life rather than increasing its length. Victor R. Fuchs, "Health, government and Irving Fisher," NBER Working Paper 6710, August 1998, p. 14. [Fuchs is Professor Emeritus of Economics at Stanford University.] ____________________________________________________________ Thought du jour: Rogoff on Stiglitz I did not call Professor Stiglitz a "charlatan", and I would never use that word to describe him. I did, however, on one previous occasion describe some of his prominent economic policy recommendations -- that countries facing debt and currency crises should respond by issuing more debt and printing more money -- as "at best highly controversial, at worst, snake oil". I have never repeated this remark, but I stand by it .... Kenneth Rogoff, "Setting the Record Straight", a letter submitted to Le Monde but not published, October 4, 2002. http://www.imf.org/external/np/vc/2002/100402.htm [Ken Rogoff is Director of the Research Department of the International Monetary Fund.] ____________________________________________________________ Thought du jour: the IMF strikes back Over the years, no critique of the fund has carried more emotion than the "austerity" charge. Anti-fund diatribes contend that, everywhere the IMF goes, the tight macroeconomic policies it imposes on governments invariably crush the hopes and aspirations of people. .... Yet, at the risk of seeming heretical, I submit that the reality is nearly the opposite. As a rule, fund programs lighten austerity rather than create it. Yes, really. Kenneth Rogoff, "The IMF Strikes Back", Foreign Policy, January/February 2003. http://www.foreignpolicy.com/issue_janfeb_2003/rogoff.html [Ken Rogoff is Director of the Research Department of the IMF.] ____________________________________________________________ Thought du jour: deschooling society The first article of a bill of rights for a modern, humanist society would correspond to the First Amendment to the US Constitution: "The State shall make no law with respect to the establishment of education." There shall be no ritual obligatory for all. To make this disestablishment effective, we need a law forbidding discrimination in hiring, voting or admission to centres of learning based on previous attendance at some curriculum. This guarantee would not exclude performance tests of competence for a function or role, but would remove the present absurd discrimination in favour of the person who learns a given skill with the largest expenditure of public funds or-what is equally likely-has been able to obtain a diploma which has no relation to any useful skill or job. Ivan Illich, Deschooling Society (Penguin Books, 1886 [1971]), p. 18. [Ivan Illich passed away on 2 December 2002, aged 76 years.] ____________________________________________________________ Thought du jour: markets vs culture [T]he free market trumps education and culture. North Korea has a 99 percent literacy rate, a disciplined, hardworking society, and a $900 per-capita GDP. Morocco has a 43.7 percent literacy rate, a society that spends all day drinking coffee and pestering tourists to buy rugs, and a $3,260 per- capita GDP. P.J. O'Rourke, Eat the Rich: A Treatise on Economics (Atlantic Monthly Press, New York, 1998), p. 233. ____________________________________________________________ Thought du jour: advice for the young economist Do not assume that if your ideas are interesting, you will be read whether or not you write well. Your paper is competing for attention with many others that constantly land on the desks of the people you hope to reach. If they cannot see at a glance that they will gain something from reading it, they will not even start. .... When arguing for the significance of your results, great is the temptation to present them with the utmost generality, with big words and in gory detail. Resist it! Try instead to make your reasoning appear simple, even trivial. This exercise in humility will be good for your soul. It will also give referees a warm feeling about you. William Thomson, A Guide for the Young Economist (MIT Press, 2001), pp. 1, 4. ____________________________________________________________ Thought du jour: World Bank economists In its early years the World Bank was concerned more to establish its credibility as a sound banking institution than with applying economic analysis, with the result that, as in most other international organizations, economists were marginalized. This situation did not change until the 1960s, under Robert McNamara, when between 1965 and 1969 the number of economists rose from 20 to 120. .... [B]y the early 1990s the World Bank employed around 800 economists, many doing research comparable with that done in universities. Roger E. Backhouse, The Penguin History of Economics (London, 2002), pp. 189-190. ____________________________________________________________ Thought du jour: corruption and happiness Every year, [Transparency International] ... asks policy wonks in 100 nations to report on local dirty business. The aim is to assign each country a number on a scale of malfeasance, from 1 to 10, and rank them from least to most corrupt. .... It’s worth noting that the world’s most honest governments don’t necessarily rule the world’s happiest people. Is Canada, a prim 9.0, a nicer place to live than Italy, a slovenly, Mafia-ridden 5.2? Who wouldn’t prefer Carnaval in Brazil (4.0) to whatever passes for fun in sterile Singapore (9.3)? Bruce Sterling, "Absolute Corruption", Wired Magazine, December 2002. http://www.wired.com/wired/archive/10.12/view.html?pg=4 ____________________________________________________________ Thought du jour: popularity of Karl Marx and Adam Smith today Adam Smith, one might say, stands in relation to liberal capitalism, a comparatively successful economic order, roughly where Marx stands in relation to socialism. Searches on Amazon.com and other booksellers indicate that titles in print about Marx outnumber books about Adam Smith by a factor of between five and ten. A hard day's browsing of undergraduate reading-lists suggests that, in economics faculties, Smith is way out in front--interesting, given that Marx saw himself as an economist first and foremost. Elsewhere in the social sciences and humanities, the reverse is true. .... It is the breadth of Marx's continuing influence, especially as contrasted with his strange irrelevance to modern economics, that is so arresting. "Marx after communism", The Economist, 20 December 2002. ____________________________________________________________ Thought du jour: the Washington consensus I submit that it is high time to end this debate about the Washington Consensus. If you mean by this term what I intended it to mean, then it is motherhood and apple pie and not worth debating. If you mean what Joe Stiglitz means by it, then hardly anyone who cares about development would want to defend it. John Williamson, "Did the Washington Consensus Fail?", November 6, 2002. http://www.iie.com/papers/williamson1102.htm ____________________________________________________________ Thought du jour: politics on US campuses When one reads about America's colleges in the media, especially in the conservative media, one gets the impression that the top universities are left-wing hothouses, filled with multicultural radicalism and fevered anti-American passions. That's not true. Most professors are liberals, and it's true that in its wisdom American society has decided to warehouse its radical lunatics on university campuses--in specialized departments that operate as nunneries for the perpetually alienated. But most students at these places do not live in an overly politicized world. David Brooks, "Making It: Love and success at America's finest universities," The Weekly Standard,12/23/2002. http: //www.weeklystandard.com/Content/Public/Articles/000/000/002/ 017ickdp.asp ____________________________________________________________ Thought du jour: John Williamson defends the Washington Audiences the world over seem to believe that [the Washington Consensus] signifies a set of neoliberal policies that have been imposed on hapless countries by the Washington-based international financial institutions and have led them to crisis and misery. There are people who cannot utter the term without foaming at the mouth. My own view is of course quite different. The basic ideas that I attempted to summarize in the Washington Consensus have continued to gain wider acceptance over the past decade, to the point where Lula has had to endorse most of them in order to be electable. For the most part they are motherhood and apple pie, which is why they commanded a consensus. John Williamson, "Did the Washington Consensus Fail?", November 6, 2002. http://www.iie.com/papers/williamson1102.htm ____________________________________________________________ Thought du jour: statistics and statisticians The term "statistics" is etymologically linked to "state": statisticians were sometimes called "statists," and before the adoption of the German term _Statistik_, their work was referred to, in English, as "political arithmetic." A statistician was someone who monitored the state of the state--population, mortality, marriage, disease, crime, climate, and so on. Louis Menand, _The Metaphysical Club_ (New York, 2001), p. 187. ____________________________________________________________ Thought du jour: macroeconomics and game theory [M]icroeconomic theory, something like price theory, is well established and has good predictive power, but there are really big problems in macroeconomics when you scale things up to the level of entire societies. I think that's reflected in the failure to predict the Asian crisis, and just to foresee a lot of events at the macroeconomy level. I think there's a simple reason for this--economies are just too complicated. When you scale things up to that level, you have all these political and cultural factors that operate to affect economic decision-making. There's this heroic attempt to use game theory to model politics and behaviours at that level, but I predict they'll beat their heads against that wall for maybe another generation until these rational choice economists who now have tenure have retired. Francis Fukuyama, interviewed by Andrew Norton in _Policy_, Spring (Sept/Nov) 2002. http://www.cis.org.au/Policy/Spring02/polspring02-5.htm [Fukuyama is author of _The End of History_. His latest book is _Our Posthuman Future: Consequences of the Biotechnology Revolution_.] ____________________________________________________________ Thought du jour: Rousseau's Émile In this celebrated book [published in 1762], Rousseau describes his program for Émile, an imaginary pupil whom he will educate naturally, free from the oppressive influence of society. It was ironic that Rousseau became a hero to progressives in the United States who were building state systems of public education, because he was hostile to social institutions and insisted that the best teacher for a child was his own father. ("A child will be better brought up by a wise father however limited, than by the cleverest teacher in the world.") He was a champion of home schooling, not public education. There was irony, too, in Rousseau's role as an adviser on parenting because he had abandoned his own five illegitimate children. Diane Ravitch, _Left Back: A Century of Failed School Reforms_ (Simon & Schuster, NY, 2000), pp. 169-170. The quote is from _The Émile of Jean Jacques Rousseau_, tr. and ed. by William Boyd (Teachers College Press, NY, 1971), p. 18. ____________________________________________________________ Thought du jour: trade as technology Trade, according to an old pedagogical device, is best thought of as just another technology. A production process in a factory turns inputs into outputs. But so does trade: we put in exports, and what comes out are imports. But like any technology, trade is subject to constant change, shifts that can benefit some countries more than others, and some individuals more than others. A new mechanized way to produce textiles upset the Luddites (and had them breaking machines in protest); but the same irritations would have accompanied (indeed, do accompany) the sudden arrival of cheap textiles not from a new-fangled device, but simply out of the machinery of trade. Alan M. Taylor, "Globalization, Trade, and Development: Some Lessons From History", NBER Working Paper 9326 (Nov 2002) http://www.nber.org/papers/w9326 ____________________________________________________________ Thought du jour: ethics and poverty [Easterly] has been forthright in pointing out the reasons why World Bank assistance failed to end poverty, and has not hidden behind euphemisms and the usual code words. He has made clear the harm that is done to the poor in poor countries by a façade of political correctness that protects corrupt governments and political elites. The protective façade has been unethical. A further thought about the absence of ethics enters our minds when we realize that the same governments and political elites who keep their own people in poverty send their representatives to participate in decisions in international organizations about how to make the world a better place. Arye L. Hillman, reviewing _The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics_ by William Easterly (MIT Press, 2001) in _European Journal of Political Economy_ 18:4 (November 2002), pp. 783-795 ____________________________________________________________ Thought du jour: university fees Thinking on fees is often muddled. Many would agree that higher education is a right - but it does not follow that it must always be free. Food, equally, is a right, yet nobody demonstrates outside shops or restaurants. Nicholas Barr, "A way to make universities universal", Financial Times, 22 November 2002. ____________________________________________________________ Thought du jour: US policy in the Middle East The US tends to believe that problems have solutions. Those posed by the Middle East almost certainly do not. Yet the US is being sucked ever deeper into this quagmire. It is a classic story of imperial expansion. The least the US can do is march in with its eyes as wide open as possible. Martin Wolf, "The world's lonely imperial power", Financial Times, 27 November 2002. ____________________________________________________________ Thought du jour: Legal Mindset v. Economic Mindset One of the most interesting comparisons ... is the confrontation between what I will call ... the Legal Mindset versus the Economic Mindset. The Legal Mindset approaches policy analysis as a case to be argued. Depending on which side you are on, you emphasize the pros and deflate the cons of the policy you want to support. A primary use of this approach is seen regularly in the press, where journalists assume all issues are two-sided. .... The assumption is that there are "sides" that are determined on the basis of political biases; your argument is based on which side you are on; and if you were employed by the other side you would argue differently. In contrast, the Economics Mindset ... believes that there are specific models out there that are more correct and specific empirical methodologies that are more credible. One does not argue one "side" versus another "side," but rather one argues for the analysis that is most credible using the most accurate models and empirical analysis available. .... The clash between these two mindsets is often irreconcilable. And it is one reason why economists are typically viewed with a bit of suspicion by the political analysts .... Economists are untrustworthy in the view of the Legal Mindset, because sometimes they will not argue for the home team but will go off on crazy tangents that help the opponents, claiming that they are following some foolish dictate of economic theory or analysis. Rebecca M. Blank, "What do economists have to contribute to policy decision-making?" The Quarterly Review of Economics and Finance, forthcoming, 2002. [Professor Blank observes that the Legal Mindset dominates in Washington, D.C. My experience is that it also dominates in the UN.] ____________________________________________________________ Thought du jour: Dornbusch on Stiglitz on IMF stabilisation policies Many, but most surprisingly, World Bank chief economist Joe Stiglitz has been preaching liberation theology. His message is simply this: the IMF is wrong, high interest rates in the process of stabilization are destructive of sound credit and fiscal restraint is inappropriate since it adds to the recessionary forces. It is not quite clear what the stabilization is all about if it is not tighter money and sounder public finances. .... To restore financial stability the first point is to put a floor under the currency. If everybody wants to get out because the risk-reward trade-off is too unfavorable, high interest rates are the way to change the equation. A successful stabilization without a hike in rates is like the Chicago Bulls with Michael Jordan -- hard to imagine. Rudi Dornbusch, "The New International Architecture", CESifo Working Paper No. 769, September 2002. Posted at www.CESifo.de [Written in 1998. Rudi Dornbusch, the well-known and well- regarded MIT professor, passed away on 25 July 2002.] ____________________________________________________________ Thought du jour: why study economics? As I have grown older, I have come to consider myself more of a social scientist and less of an economist. Yet, I regularly sit across the desk from students-- undergraduates and prospective graduate students--who want to work on policy issues. There is never any question in my mind how to advise a young scholar who wants serious research training in a Ph.D. program and who is motivated by an interest in policy questions. The theoretical frameworks, the intellectual rigor, and the methodological tools that one is given in the profession of economics are far more useful for policy analysis than any other approach available. I tell them to get a Ph.D. in economics. Rebecca M. Blank, "What do economists have to contribute to policy decision-making?" The Quarterly Review of Economics and Finance, forthcoming, 2002. ____________________________________________________________ Thought du jour: social policy It is now (or should be) an objective of social policy to build the identity of a person around some community with which he is associated. It is this function which is one of the characteristics which distinguishes social policy from economic policy and the role of Government from the role of the private market. Voluntary hospitals in the United States, for example, have public wards for indigents which tend to be full of black people. This can be contrasted with the integrated wards and outpatient departments of British hospitals under the National Health Service. Richard M. Titmuss, _Social Policy: An Introduction_ (Pantheon Books, New York, 1974), p. 38. ____________________________________________________________ Thought du jour: Bin Ladenism It [al-Qaida] is partly a corrupt multinational corporation, partly a crime family, partly a surrogate for the Saudi oligarchy and the Pakistani secret police, partly a sectarian religious cult, and partly a fascist organization. Its most recent taped proclamation, whether uttered by its leader or not, denounces Australia and celebrates the murder of Australians--for the crime of assisting East Timorese independence from "Muslim" Indonesia! But this doesn't begin to make the case against Bin Ladenism. What does it demand from non-Muslim societies? It demands that they acknowledge their loathsome blasphemy and realize their own fitness for destruction. What does it demand for Muslim societies? It demands that they adopt 17th- century norms of clerical absolutism. Christopher Hitchens, "Terrorism: notes toward a definition", Slate Magazine, 18 November 2002. www.slate.com ____________________________________________________________ Thought du jour: the 'poverty' industry Quite a lot of money has been made in writing about poverty. It is financially more rewarding than working as public servants to improve services for poor people. Richard M. Titmuss, _Social Policy: An Introduction_ (Pantheon Books, New York, 1974), p. 16. ____________________________________________________________ Thought du jour: public schools and inequality Lest non-New Yorkers think we're all mad, many of us have found a solution to this lunacy: public education. New York City has dozens of distinguished public schools. The Upper East Side, in particular, has public schools in which the quality of teaching rivals that of the most selective private schools. Clara Hemphill, "Admissions anxiety", New York Times, Week in Review, 17 November 2002, section 4, p. 11. http://www.nytimes.com [The Upper East Side is New York City's most exclusive residential neighbourhood. You will not find blacks or Hispanics in those schools. --LW] To sum up, those who have the interests of the disadvantaged at heart should not oppose school choice. Rather, they should concern themselves with designing a system of government *finance* of education that favours the poor, the inarticulate and the underprivileged, in contrast to the current system of government *provision* of education that favours the wealthy, the articulate and the privileged. Larry Willmore, "Education by the State", DESA Discussion Paper No. 27 (November 2002), p. 12. ____________________________________________________________ Thought du jour:The origin of government schools in Britain In Britain just before universal compulsion (in the 1860s) there was a near-universal system of private fee-paying schools, and the majority of parents were using it. In 1870 it was thought necessary to complement this system with a few government schools ("board schools") in those areas where there was proved insufficiency. In 1880, universal compulsion was legislated. It was next argued that since the government could not force parents to do something they could not afford, schooling should be made "free." Free schooling should be available even to the majority of parents who were previously paying for it as well as to the minority that the legislation was ostensibly aimed at. Free schooling required full subsidization. It was next argued that only the new government ("board") schools could fully qualify for such treatment. Private schools that were run for a profit should not be aided because this practice would subsidize profit- makers. (This anti-profit principle was incorporated into every piece of nineteenth-century legislation). Most of the remaining private schools were connected with the churches. It was argued that it would be wrong to treat these as favourably as the "board schools" because that would be using Catholic taxpayers' contributions to subsidize Protestant schools and vice- versa. The result was that the new "board schools" originally set up to complement a private system eventually *superseded* it. Edwin G. West, "The economics of compulsion", 1974, p. 2. http://www.ncl.ac.uk/egwest/pdfs/economics%20of% 20compulsion.pdf [Apologies for the length, but this is a concise summary, in the author's own words, of E.G. West's well-known book, _Education and the State_ --LW] ____________________________________________________________ Thought du jour: humanising globalisation "In a globalising world, ... international institutions of governance must respond better to the needs of the developing world. But that is not enough. .... Even the most equitable international order will amount to little if a corrupt or unrepresentative government at home fails to ensure equitable sharing of globalisation's benefits. Mary Robinson, "Humanising Globilisation: A Role For Human Rights", United Nations, 30 October 2002. ____________________________________________________________ Thought du jour: China's property revolution Just 10 years into its experimental housing reform programme, Shanghai has gone from having next to no private home ownership - all but outlawed after the communist revolution - to a market where more than 90 per cent of homes are privately owned. .... As recently as 1995 in Shanghai, there were different types of land titles, designated by the colour of the paper on which they were recorded. A green title meant that land could be traded; red meant government ownership; yellow deeds covered houses but not the land they occupied; brown meant property could be sold to foreigners. The last obstacle to a western- style property market was removed late last year, when foreigners buying land were put on a par with locals. A single title now covers ownership of any building and the right to use the land for between 50 and 70 years. Richard McGregor, "China's property revolution", Financial Times, 13 November 2002. (www.ft.com) ____________________________________________________________ Thought du jour: writing styles of PhDs The essays that the graduating BAs would submit with their applications were often brilliant. After five or six years of PhD work, the same people would write incomprehensible crap. Where did they learn it? They learned it from us. Frederick Crews, _Postmodern Pooh_ (North Point Press, 2002), quoted in Sandy Starr, "Pooh-poohing postmodernism", _Spiked_, 5 November 2002. http://www.spiked-online.com/Articles/00000006DB0F.htm [Frederick Crews is Emeritus professor of English at the University of California--Berkley.] ____________________________________________________________ Thought du jour: fences and windows Ms Klein deplores freedom to trade as one of the vilest manifestations of the neoliberal tyranny. Yet in "Fences and Windows" she is very keen on taking down fences and opening windows. Surely a trade barrier is a fence and economic openness is a window. What makes trade an exception to the rule that fences are bad and windows good? We may never know. "Why Naomi Klein needs to grow up", The Economist, 8 November 2002. [Naomi Klein, 32- year-old Canadian journalist, is author of "No Logo" and, more recently, "Fences and Windows: Dispatches from the Front Lines of the Globalisation Debate".] ____________________________________________________________ Thought du jour: chimps and culture [O]ur shared ancestor [the chimpanzee] of about six million years ago was already quite complexly cultural in these ways and this helps us understand where our unique cultural nature came from. It didn't come out of the blue. Does that mean chimps should be eligible for membership of the Royal Society or British Academy? No, he replied: "Chimpanzees have other things to do than to spend their time debating these points in academies." Prof Andrew Whiten, professor of evolutionary and developmental psychology, speaking in a public debate in London, backed by the British Academy and the Royal Society. as quoted in "These chimps are fishing for ants... but does this ritual make them cultured?", Daily Telegraph, 8 November 2002. ____________________________________________________________ Thought du jour: old and new duties of government It is common enough to read an article or the account of a speech of which the first part consists of a denunciation of the inefficiency and corruption to be found in the administration of some government program - but this is often followed by a second part which draws our attention to some pressing social problem coupled with the proposal that the government set up a new program or agency or expand an old one to deal with this problem. To ignore the government's poor performance of its present duties when deciding on whether it should or should not take on new duties is obviously wrong (old duties were once, in the main, new duties). .... [This] continued expansion of the government's role will inevitably lead us to a situation in which most government activities result in more harm than good. My surmise is that we have reached this stage. Ronald H. Coase, "Economists and public policy", in D.B. Klein (ed.)._What do Economists Contribute? (NYU Press, New York, 1999), pp. 50-51. ____________________________________________________________ Thought du jour: free lunches It has become fashionable in the last two decades, not only among economists but among those who like to quote economists, to advert to an incontestable, absolute truth colloquially expressed as: there is no free lunch. .... Maybe it's because of where I've been in economics, but I prefer the alternative truth, that there are free lunches all over just waiting to be discovered or created. What I have in mind is what we technically call Pareto improvements, or the gains from trade. There are non-zero sum games that permeate the economy that have settled into, or have been forced into, inefficient equilibrium. There are not just free lunches but banquets awaiting the former socialist countries that can institute enforceable contract, copyrights, and patents, or eliminate rent-free housing and energy subsidies. How the lunches get distributed matters; but the lunches are there. Thomas C. Schelling, "What do economists know", in Daniel B. Klein (ed.), _What do Economists Contribute? (NYU Press, New York, 1999), pp. 123-124. ____________________________________________________________ Thought du jour: those naughty Puritans Puritan sermons, poetry, and love letters celebrated marital and procreative sex in part to discourage all sexuality before or outside marriage. Never people to do things by halves, the Puritans extolled foreplay and orgasm by husband and wife. In a guide to marriage, Reverend William Gouge preached that sex "must be performed with good will and delight, willingly, readily, and cheerfully." Believing that conception depended upon a female orgasm, ministers urged every husband to attend to his wife's needs. Another marital guide instructed that "when the husband cometh into the wife's chamber, he must entertain her with all kind of dalliance, wanton behavior, and allurements to venery." Alan Taylor, "Martyrs to Venus", The New Republic, 28 October 2002. http://www.thenewrepublic.com/docprint.mhtml?i=20021028&s= taylor102802 ____________________________________________________________ Thought du jour: Deirdre McCloskey What didn't I like about the book? Since McCloskey's sex change, she has adopted a motherly tone in her writing. She sprinkles her writing with feminine words such as "dear" and bashes men throughout ("oy, guys!"). I suppose she has embraced this shtick to show that she is now a woman, but it's annoying. And listen up, Deirdre McCloskey, it's bad rhetoric. McCloskey has made a name for herself by arguing that we economists need to use better rhetoric, to tell better stories, and so forth, but no one enjoys a stern lecture from mother (or worse yet, from Aunt Deirdre). Robert A. Lawson, reviewing Deirdre McCloskey, _How to Be Human Though an Economist_, in The Independent Review 7:2 (Fall 2002), p. 287. [Deirdre McCloskey, formerly Donald McCloskey, is a well- known economic historian.] ____________________________________________________________ Thought du jour: Machiavelli on attacking a divided enemy There was so much discord between the plebs and the nobility in the Roman republic that the Veientes, in conjunction with the Etruscans, thought this disunion would enable them to destroy the power of Rome. .... The Veientes thought that if they attacked the Romans, when disunited, they would overcome them; but their attack caused the Romans to unite and brought about their own ruin. For discord in a republic is usually due to idleness and peace, and unity to fear and to war. Had the Veientes been wise, then, the more disunited they found the Romans to be, the more studiously should they have refrained from going to war with them, and have striven to get the better of them by the artifices men use in time of peace. Niccolo Machiavelli (1469-1527), "To attack a divided city in the hope that its divisions will facilitate the conquest of it is bad policy", Discourse No. 25, Book 2 of The Discourses (Penguin Classics, 1983), p. 360. [Could this have relevance today for attacks on Iraq? --LW] ___________________________________________________________ Thought du jour: US superiority complex During the most recent presidential election a Time magazine- CNN poll asked voters whether they were in the top one percent of income earners. Nineteen percent reported that they were, and another 20 percent said that they expected to be there one day. We are a nation in which almost everybody is above average. David Brooks, "Superiority Complex", The Atlantic Monthly, November 2002. http://www.theatlantic.com/issues/2002/11/brooks.htm ____________________________________________________________ Thought du jour: Washington consensus The [Washington] consensus may be an impaired brand, but some of the ideas remain sound. A recent study, for example, has found that infant mortality fell 6 per cent in the Argentine municipalities that privatised their water services and that this positive effect was larger in the poorest municipalities, where infant mortality fell 24 per cent. But the foul political mood is immune to such findings. Bolivia was recently rocked by violent street protests that in effect halted government plans to privatise water services. Tragically for the poor of the world, the blanket repudiations of the Washington consensus in the early 2000s tend to be as superficial as their blanket acceptance a decade ago. Moisés Naím, "A damaged brand", Financial Times 28 October 2002. www.ft.com ____________________________________________________________ Thought du jour: Adam Smith on oppression of the poor Laws and government may be considered in this and indeed in every case as a combination of the rich to oppress the poor, and preserve to themselves the inequality of the goods which would otherwise be soon destroyed by the attacks of the poor, who if not hindered by the government would soon reduce the others to an equality with themselves by open violence. Adam Smith, Glasgow lectures in jurisprudence (Cannan edition, 1896). ____________________________________________________________ Thought du jour: common sense and economics [W]hen economics and common sense conflict, common sense is almost always wrong. This signals a profound failure in the typical education. Most people - even, I daresay, some readers of the Financial Times - are economic illiterates. Education authorities would do a great service to future generations if they ditched woolly lessons in citizenship or even worthy ones such as geography in favour of economics. This claim may seem over-reaching given the whiff of disrepute that clings to the subject. While economists are obviously in great demand in both public service and private business, we are feared rather than respected. Diane Coyle, "Common sense is alien to economics" Financial Times (www.ft.com), 28 October 2002. [Is this right? I also suspected that economists are not very popular, but are we feared? --LW] ___________________________________________________________ Thought du jour: Inequalities among public schools One of the most consistent findings in this study [of 840 elementary and middle schools in NYC] is the lack of vertical equity and equal opportunity in the distribution of teacher resources (teacher salary and certification). .... The likely explanation for this result is that the system allocates more teacher resources to schools with needier students but the union contract and regulations allow teachers with seniority the right to transfer to desirable schools, which makes it difficult for low performing schools to retain experienced and licensed teachers. P. Iatarola and L. Stiefel, "Intradistrict equity of public education resources and performance", Economics of Education Review, forthcoming, 2002. ____________________________________________________________ Thought du jour: Marx on free university education [Marx, unlike many of his followers today, recognized that 'free' university education represents a transfer of income from taxpaying workers to the upper classes. --LW] "Universal compulsory school attendance. Free instruction." The former exists even in Germany, the second in Switzerland and in the United States in the case of elementary schools. If in some states of the latter country higher education institutions are also "free", that only means in fact defraying the cost of education of the upper classes from the general tax receipts. Karl Marx, Critique of the Gotha Program, 1875. http://www.eserver.org/marx/1875-gotha.critique.txt ____________________________________________________________ Thought du jour: Argentina Although the economic profession is still digesting the lessons from Argentina's traumatic crisis, it is already possible to extract some clear conclusions. Most of these lessons are neither new, nor are they surprising. In fact, as the crisis unfolded many observers of the Argentine scene warned the authorities that the experience from prior crises suggested that Argentina was facing a very vulnerable situation. As is usually the case, the authorities sneered at these warnings, arguing that Argentina was really very different from other countries. Sebastian Edwards, "The Great Exchange Rate Debate after Argentina", NBER Working Paper 927, October 2002. ____________________________________________________________ Thought du jour: Monterrey Consensus on Financing for Development The Monterrey Consensus is certainly a disappointing document. It is general and imprecise and fails to address systemic issues. .... It includes few concrete initiatives. However many systemic issues are still mentioned, suggesting willingness to keep talking about them, and many delegations explicitly said this. John Langmore, "Modest hope at Monterrey", _WIDER Angle_, No. 1/2002, p. 17. [The Monterrey Consensus was approved by the UN General Assembly long before the meeting of the International Conference on Financing for Development took place in Monterrey, Mexico, 18 to 22 March, 2002. --LW] ____________________________________________________________ Thought du jour: ideology as a rationale for public schools [C]ritics [of vouchers] are concerned that some private schools will have curriculums that do not fully reflect the social goals of education. Many people have indeed argued that inculcating students with patriotism and ideology is the crucial reason for public education in the first place .... In the United States, there has been a fear that, if some private schools are captured by groups with peculiar religious or cultural views, ideological goals of public education will be undermined. ... [A]s someone who went through Soviet schools, I am underwhelmed by the alleged benefits of indoctrination. But even someone who believes in large social benefits of teaching state ideology must recognize that these problems can be largely addressed contractually, by requiring that particular subjects be taught and others not taught, stipulating the basic curriculum, and testing students as a condition for school eligibility for a voucher program. Andrei Shleifer, "State versus private ownership", Journal of Economic Perspectives 12:4 (Fall 1998), pp. 146-147. ____________________________________________________________ Thought du jour: slavery and 'love to domineer' The pride of man makes him love to domineer, and nothing mortifies him so much as to be obliged to condescend to persuade his inferiors. Wherever the law allows it, and the nature of the work can afford it, therefore, he will generally prefer the service of slaves to that of freemen. The planting of sugar and tobacco can afford the expence of slave-cultivation. The raising of corn, it seems, in the present times, cannot. In the English colonies, of which the principal produce is corn, the far greater part of the work is done by freemen. The late resolution of the Quakers in Pennsylvania to set at liberty all their negro slaves, may satisfy us that their number cannot be very great. Adam Smith, Wealth of Nations (1776), book 3, chapter 2, paragraph 10. [We now know that Adam Smith was wrong: slaves were profitable for plantation owners. But it is interesting that Smith believed that slaveowners were willing to sacrifice profits for exercise of power. --LW]] ____________________________________________________________ Thought du jour: nationalism and government schools National schools have been nurseries of national patriotism. .... In state schools, literature, geography, history and civics have been taught for nationalistic ends. Pupils have been taught to worship the national symbols and heroes. Everywhere, the masses were thus made to believe that theirs is the best nation of them all and the happiest and fairest land on earth. Contempt for other nations and lands often resulted from such teaching, and the national school often stood as an additional menace to world peace. James Mulhern, _A History of Education: A Social Interpretation_ (second edition, New York, Ronald Press, 1959), p. 428. ___________________________________________________________ Thought du jour: why economics is not (need not be) boring [T]he honest truth is that what drives me as an economist is that economics is fun. I think I understand why so many people think that economics is a boring subject, but they are wrong. On the contrary, there is hardly anything I know that is as exciting as finding that the great events that move history, the forces that determine the destiny of empires and the fate of kings, can sometimes be explained, predicted, or even controlled by a few symbols on a printed page. We all want power, we all want success, but the ultimate reward is the simple joy of understanding. Paul Krugman, "Incidents from my career", 1995. http://www.wws.princeton.edu/~pkrugman/incidents.html ___________________________________________________________ Thought du jour: universal pensions There is evidence that such non-contributory pension schemes, especially universal schemes, can have a significant impact on poverty reduction at family and community level. Economic evidence suggests that such measures are affordable even for the poorest countries. Willmore (2001) for example, in his study of existing schemes in Africa (Mauritius, Namibia and Botswana), calculates the cost to be between 0.4 to 2 percent of GDP. The overall cost to governments is to a large extent dependent upon political rather than economic decisions, and is determined by decisions about the benefits paid and criteria for eligibility. HAI takes a rights-based approach to development, and its mission is to work with and for disadvantaged older people worldwide to achieve a lasting improvement in the quality of their lives. .... Further research is needed on existing non-contributory pensions and grants to older people, focusing both on their impact on wider poverty reduction and the well-being of older people. This will also require governments and civil society to adopt a broader approach to social security for older people. From Help Age International (HAI), "Poverty and pensions: The rights of older people" http://www.id21.org/society/Insights42art9.html ____________________________________________________________ Thought du jour: our current technological revolution The original British industrial revolution: how big was it? In 1780 it took hand-spinning workers 500 hours to spin a pound of cotton. By 1840 it took machine-spinning workers only 3 hours to perform the same task--a rate of technological progress of 8.5 percent per year sustained across more than half a century (Freeman and Louca (2001)) in sectors that accounted for 3 percent of final demand. Our current technological revolution [in information and communications] is seven times as fast. It is twice as salient, measured by the share of its products in total demand. And it has gone on for at least as long. That makes me think that our current technological revolution is, relative to the size of the economy in which it takes place, at least fifteen times as large as the industrial revolution studied in school. Brad DeLong, "Technology and Opportunity", Keynote Talk at the Francisco Partners Fal1 2002 Investors Conference, October 8, 2002 http://www.j-bradford- delong.net/movable_type/archives/000958.html ____________________________________________________________ Thought du jour: corporate fraud The biggest of the railroad frauds took place in the 1870s, when it appeared that the Union Pacific was bribing 1/3 the U.S. Congress, and that the Central Pacific--run by Crocker, Hopkins, Huntington, and Stanford--had paid an extra $40 million to a construction company owned by--guess who?-- Crocker, Hopkins, Huntington, and Stanford. Money that the largely-British investors in the Central Pacific had thought was going into earth-moving and track-laying went, instead, to form the core endowment of a great West Coast University. Brad DeLong, "Technology and Opportunity", Keynote Talk at the Francisco Partners Fall 2002 Investors Conference, October 8, 2002 http://www.j-bradford- delong.net/movable_type/archives/000958.html ____________________________________________________________ Thought du jour: Cuba ON THEIR way to Cuba, Tattlin and her husband stop to speak with someone from his company who has previously served on the island. "But what is the basic problem?" they ask him. "Fidel is an old man that can't admit he's made a mistake."" "But surely," they insist, "it can't be as simple as that." "Oh yes it can." Mark Falcoff, reviewing _Cuba Diaries: An American Housewife in Havana_ by Isadora Tattlin in _Commentary_, October 2002. http://www.commentarymagazine.com/bk.falcoff.htm ____________________________________________________________ Thought du jour: university education in 16th century England [Oxford and Cambridge] were erected by their founders at the first only for poor men's sons, ... but now they have the least benefit of them by reason the rich do so encroach upon them.... In some grammar schools likewise which send scholars to these universities it is lamentable to see what bribery is used; for ere the scholar can be preferred, such bribage is made, that poor men's children are commonly shut out, and the richer sort received. Holinshed's _Chronicles of England, Scotland and Ireland_ (1577). Cited by R.B. Morgan, _Readings in English Social History_ (Cambridge UP, London, 1923), pp. 297-298. ____________________________________________________________ Thought du jour: unintended consequences of import protection When Ross Perot fretted about the "giant sucking sound" of U.S. manufacturing jobs fleeing the country, he wasn't warning against U.S. anti-dumping and countervailing-duty law. But he should have been. As suppliers of such raw materials as steel win more protection, U.S. factories are doing what makes the most sense -- moving production overseas where they can buy the stuff they need at more affordable prices. .... In 1999 domestic wire-rod producers filed a Section 201 petition, alleging that foreign competition was causing them "harm." The Clinton Administration agreed, and granted them temporary protection in 2000. Higher U.S. prices followed and ... the average price of high- quality steel wire rod is now $30 to $60 more per metric ton in the U.S. than on the world market. Companies that make wire out of raw steel wire rod are finding that they can't pass along their higher costs to their customers, which make consumer products. .... Overall, while some 2,000 jobs are protected in steel wire-rod production, upward of 100,000 jobs that depend on competitively priced wire and steel wire rod are at risk. "High (Steel) Wire Act", Wall Street Journal, 2 October 2002. ____________________________________________________________ Thought du jour: Hayek on game theory Question: What is your assessment of game theory? Hayek: I don't want to be unkind to my old friend, the late Oskar Morgenstern, but while I think his book is a great mathematical achievement, the first chapter which deals with economics is just wrong. I don't think that game theory has really made an important contribution to economics, but it's a very interesting mathematical discipline. F. A. Hayek, _Hayek on Hayek_ (University of Chicago Press, 1994), p. 148. ____________________________________________________________ Thought du jour: The Economist's take on Lula One radical path for Brazil would be to cut the entitlements of the better-off and concentrate state spending on the poor. That ought to appeal to a party of the left. Yet the PT [Workers' Party] opposed Mr Cardoso's efforts to do this, for example by cutting civil-service pensions. Lula's party draws many of its members from civil-service unions and public universities. He has done little to discourage the idea that he would throw money at social problems. And the industrialists and conservative political bosses now flocking to embrace him do so in the hope of state largesse. "The meaning of Lula", The Economist, leader, 5 October 2002. www.economist.com ____________________________________________________________ Thought du jour: the power of the state In one decade in the eighteenth century, according to the Swedish economist and historian Eli Heckscher in his book of 1932, Mercantilism, the French government sent tens of thousands of souls to the galleys and executed 16,000 (that's about 4.4 people a day over the ten years: you see the beauty of statistical thinking) for the hideous crime of . . . are you ready to hear the appalling evil these enemies of the State committed, fully justifying hanging them all, every damned one of their treasonable skins? . . . importing printed calico cloth. Deirdre McCloskey: The Two Secret Sins of Economics. Forthcoming in Prickly Paradigm Pamphlets, Marshall Sahlins, ed., University of Chicago Press, July, 2002 http://www.mugu.com/pipermail/upstream-list/2002- June/004271.html ____________________________________________________________ Thought du jour: economic forecasting IN THE bible, Joseph tells the pharaoh to expect seven years of plenty followed by seven lean years. That was, perhaps, the first documented business cycle--and the first (and probably last) example of an accurate economic forecast. Pam Woodall, "The unfinished recession: a survey of the world economy", Supplement to The Economist, 28 September 2002, p. 5. ____________________________________________________________ Thought du jour: the brain drain in Argentina Argentina has a population of some 36 million. The fact that over 3 million Argentines, typically among the best-educated and most productive workers, now reside in the United States, and the potential for more to follow, both mitigates the costs of Argentine economic failure today, and (one hopes) energises would-be reformers to find ways to stem the brain drain. Charles W. Calomiris, _A Globalist Manifesto for Public Policy_, Occasional Paper no. 124 (IEA, London, 4 February 2002), p. 50. www.iea.org.uk ____________________________________________________________ Thought du jour: interview with Brad DeLong Brian Snowden has one of his far-ranging _World Economics_ interviews with Bradford De Long, titled "In Praise of Historical Economics." Snowden asks, "Your research with Lawrence Summers on economic growth has stressed the important role played by equipment investment. What led you to that conclusion?" De Long replies, "Robert Summers was the father of Larry Summers. Therefore, Larry Summers and I had access to the Summers-Heston data set about six months before everyone else did. So we went in search of big correlations and this was the biggest simple correlation that we found in the data." January/March 2002, 59-100. Bernard Saffran, "Recommendations for Further Reading", Journal of Economic Perspectives, Summer 2002, p. 223. ____________________________________________________________ Thought du jour: anti-globalisation protesters I am optimistic that globalisation will triumph, partly because of an important difference in the current debate -- anti-globalisation today is not entirely a self-interested movement. The good intentions of many anti-globalisation protesters present advocates of globalisation with an opportunity. If well-intentioned protesters could be convinced that reversing globalisation would harm the world's poorest residents (as it surely would), some (perhaps many) of the protesters would change their minds about opposing globalisation. .... Indeed, I believe it would be easy to show that there is widespread support for globalisation among the poor residents of developing economies. They understand better than anyone that the entry of foreign firms into their economies and the opening of export markets translate into more food on their tables and a chance for a better life for them and their children. Charles W. Calomiris, _A Globalist Manifesto for Public Policy_, Occasional Paper no. 124 (IEA, London, 4 February 2002), p. 69. www.iea.org.uk ____________________________________________________________ Thought du jour: left and right in politics Someone who favours a strong military is (in the US) likely to favour judicial restraint, be attached to religion, against sexual laxity, tough on crime and in favour of lower taxes. As the author [of The Blank Slate] asks, "Why on earth should people's beliefs about sex predict their beliefs about the size of the military? What does religion have to do with tax?" Both left and right are full of contradictions. The left is permissive about sexual behaviour but not about business practices. Conservatives want to preserve communities and traditions but also favour the free market economy that subverts them. Moreover these clusters of views have not always held together historically. In the early 19th century for instance free market doctrines were the province of radical liberals and it was conservatives who espoused - as some of them still do - agricultural protection and a strong state. It is indeed highly artificial to rank attitudes on a single dimension corresponding to the seating of delegates to the French Revolutionary Assembly of 1789. "Humanitarianism without illusions" Samuel Brittan: Financial Times 27/09/02 http://www.samuelbrittan.co.uk/text124_p.html ____________________________________________________________ Thought du jour: adverse selection of public school teachers and administrators [A]n organization that does not reward productive performance will be especially attractive to workers who are less productive (less able, less hard working, etc.), while the more productive workers will seek out opportunities elsewhere, in organizations that recognize their worth and reward them for it. By the same logic, an organization that gives its workers complete job security--in exchange, say, for somewhat less pay than they might earn elsewhere--will tend to attract workers who are highly risk averse and security-conscious, while workers who are more open to risk (because, perhaps, they are more talented or confident or ambitious or innovative) will often find other opportunities more attractive. Thus, to the extent that these forces have been operating within the pubic school system--and it is difficult to believe they haven't been--the current system is probably filled with teachers and administrators who are the wrong types. Terry M. Moe, "Politics, control, and the future of school accountability", paper presented at the Kennedy School of Government, Harvard University, 10-11 June 2002, and posted at http://www.ksg.harvard.edu/pepg/ . ____________________________________________________________ Thought du jour: Stephen Macedo on civic education Now, as before, some [parents] complain because public schools do what they are supposed to do: intervene between parents and children to teach children civic virtues, to prepare children in various ways to be good citizens of our regime and not only followers of parental beliefs. A differentiated society ... serves the cause of freedom, and promotes moral laxity as well as a certain kind of individualism. All this is exactly what fundamentalists object to. In such an environment, parents will have a hard time teaching their children that the "totality" of truth is found in the Christian Bible. Some fundamentalists ... [feel] that it is the essence of their religious view that truth in every sphere of life is to be sought only in the Bible. .... At this point there may be nothing more to say to such people, except to point out that their religious beliefs are, unfortunately, inconsistent with the demands of good citizenship in a religiously pluralistic society. Stephen Macedo, _Diversity and distrust: civic education in a multicultural democracy_ (Harvard UP, 2000), pp. 125-126, 181 and 186. [Compare this to JS Mill:] A general State education is a mere contrivance for moulding people to be exactly like one another: and as the mould in which it casts them is that which pleases the predominant power in the government, whether this be a monarch, a priesthood, an aristocracy, or the majority of the existing generation, in proportion as it is efficient and successful, it establishes a despotism over the mind, leading by natural tendency to one over the body. An education established and controlled by the State, should only exist, if it exist at all, as one among many competing experiments, carried on for the purpose of example and stimulus, to keep the others up to a certain standard of excellence. John Stuart Mill, On Liberty (1859), chapter V. [My conclusion: Mill would disagree with Macedo, even though he packages his views as 'liberal' policies, with tolerance for diversity. Liberals do not run re-education camps. -- LW] ____________________________________________________________ Thought du jour: civic education in modern America Now, as before, some [parents] complain because public schools do what they are supposed to do: intervene between parents and children to teach children civic virtues, to prepare children in various ways to be good citizens of our regime and not only followers of parental beliefs. [W]e cannot give carte blanche to everything that claims the cover of religious freedom. Some religious beliefs are at odds with liberalism itself. We should tolerate the intolerant, as long as they do not genuinely threaten the survival of free institutions, but we need not bend over backward to make life easy for them. Stephen Macedo, _Diversity and distrust: civic education in a multicultural democracy_ (Harvard UP, 2000), pp. 125-126 and 147. [Macedo is Professor of Politics at Princeton University.] ____________________________________________________________ Thought du jour: Havana Forty-three years of totalitarian dictatorship have left he city of Havana--one of the most beautiful in the world-- suspended in a peculiar state halfway between preservation and destruction. For myself, I found the absence of the most grating aspects of commercialism aesthetically pleasing: McDonald's restaurants (and their like) would ruin Havana as a townscape as comprehensively as time and neglect. And the comparative lack of traffic in Havana demonstrates how mixed a blessing the inexorable spread of the automobile has been for the quality of city life. Had Havana developed "normally, " its narrow grid-pattern streets would by now be choking with traffic and pollution, a suffocating inferno like Guatemala City or San José, Costa Rica, where to breathe is to grow breathless, where noise makes the ears sing, and where thoughts turn to escape as soon as possible. .... Few new buildings have been added to Havana, which is just as well, of course, since those few are in the style of totalitarian modernism, and ruin the neighborhood. In the very center of the city, moreover, which UNESCO has declared to be part of humanity's patrimony, tasteful restoration work is under way. .... But the scale of the restoration of Havana is as nothing compared with the scale of its ruination. It is quite literally crumbling away. .... [W]ho created Havana, and where did the magnificence come from, if before Castro there were only poverty, corruption, and thuggery? Best to destroy the evidence, though not by the crude Taliban method of blowing up the statues of Buddha, which is inclined to arouse the opprobrium of the world: better to let huge numbers of people camp out permanently in stolen property and then let time and neglect do the rest. Theodore Dalrymple, "Why Havana Had to Die", Urbanities 12:3 (Summer 2002). http://www.city-journal.org/html/12_3_urbanities- why_havana.html [Theodore Dalrymple is a psychiatric doctor working in an inner city area in Britain. A recent interview is posted at http://www.cis.org.au/Policy/winter02/polwin02-5.htm ] ____________________________________________________________ Thought du jour: Hayek on the Keynesian revolution Question: [After hearing Hayek praise John Hicks.] Do you think that what is now called the Keynesian revolution should have been called the Hicksian revolution? Hayek: I certainly don't think of Hicks as a revolutionary. I think he tried to give it a more acceptable form. But I have reason to say that it probably should be called a Kaldorian revolution, not for anything which is connected with Kaldor's name, but what spread it was really Lord Beveridge's book on full employment, and that was written by Kaldor and not by Beveridge, because Lord Beveridge never understood any economics. Hayek: ....[In 1946] I mentioned [to Keynes] what Mrs [Joan] Robinson and [Richard] Kahn were doing on monetary policy. He burst out, "They are just fools. You know, my ideas were frightfully important in the 1930s. There was no question of combating inflation. But you can trust me, Hayek, my ideas have become dated. I'm going to turn public opinion around like this [snapping his fingers]" Six weeks later he was dead. I think he might have done it. F. A. Hayek, _Hayek on Hayek_ (University of Chicago Press, 1994), pp. 87-88, 92. [Beveridge, a British economist, was--formally, at least-- author of _Unemployment_ (1931), and headed the LSE from 1919 to 1937. He is perhaps best known for the "Beveridge Report" of 1942.] ____________________________________________________________ Thought du jour: free higher education Free Higher Education One of the things we economists can never understand is the claim that paying for "higher education is the responsibility of government"--and not at all the responsibility of those getting educated. There are powerful arguments that government should pay a part of the cost of higher education (after all, the public will benefit from externalities generated by ideas and inventions and accomplishments made possible by someone's higher education) . There are powerful arguments that government should advance a large chunk of the money to fund higher education (banks are loathe to lend to those with no collateral, after all). And there are powerful arguments that governments should insure those who go to college against the possibility that college won't raise their incomes (the risk that one's income will be low after college and thus that repaying large loans will be onerous is one of those individual risks that cries out for public insurance). But going to college is a very good thing for the college- goer. College-goers are much richer over their lives than non-college-goers. To tax the public to subsidize college- goers is a reverse Robin Hood enterprise: it takes from the (relatively) poor and gives to the (relatively) rich. Hence to economists the claim that social democracy requires that general taxpayers pay all of everybody's college education seems simply totally ridiculous. Brad DeLong, posted to his "Semi-Daily Journal" on 23 September 2002 at 10:23 a.m. http://www.j-bradford-delong.net/movable_type/ ____________________________________________________________ Thought du jour: Pakistani universities A strong, competent, well-qualified professor can be a tower of strength for a department for a very long time. Conversely, the appointment of even a single mediocre and incompetent person, who later gains tenure, reduces the pressure for intellectual alertness and scrupulousness in the university as a whole. With time, that person rises to positions of administrative authority, depressing standards and reducing the importance of merit as a criterion for progress. Today, every [university] teacher receives a salary cheque whether or not he works, and for quite a few teachers a government job is nice additional income while they pursue their various private businesses. There is simply no moral basis for indefinitely supporting indolence and incompetence; the cost is ultimately born by the taxpayer, or passed on in the form of international debt to generations yet unborn. Pervez Hoodbhoy,"Pakistani universities-which way out?", in P. Hoodbhoy (ed), _Education and the State: Fifty Years of Pakistan_ (Oxford UP, Karachi, 1998), pp. 270, 279. ____________________________________________________________ Thought du jour: Pakistani primary and middle schools Joy in Learning. Pakistan's public schools (primary and middle) offer strict regimens for children, where playful learning is not common or encouraged. Many children, in rural and urban areas, spend long hours in dark and overcrowded classrooms, receive occasional beatings, are required to memorize an overload of (often irrelevant) facts which their counterparts in other countries can simply look up in encyclopaedias (or, in industrialized countries, increasingly on computer CD-ROMs), and face regular absenteeism by their teachers. This is the cause for high drop-out and repetition rates. .... In government and mosque schools in the NWFP, spot checks revealed teacher absenteeism of almost 20 per cent, and almost all parents report that a teacher's absence hindered their child's education. Many teachers lack the necessary skills. Even when teachers attend, learning is hindered by poor content knowledge and teacher training. A recent study in the NWFP found that only 6 out of 10 teachers could pass a fifth grade mathematics exam (compared to the 4 in 10 pass rate among their students). The distribution of improved classroom materials failed to increase achievement levels among students because teachers failed to use the materials. ... Increased expenditures on teacher positions will not increase the effective supply of educational services if the new teachers are ignorant, poorly trained, or absent. .... A positive recent development is the growth of the private education system. This is mainly an urban phenomenon, but is increasingly filling the gaps in the public system. It is estimated that, overall, private education now accounts for about 10-12 per cent of gross enrolments. Almost all of these schools are profit-based, but parents are willing to sacrifice a good deal of their meagre income and get better educational quality in return. In these settings, head teachers, teachers, students and community are excited about the educational process and take their school very seriously. Bragman, Jacob and Nadeem Mohammad. "Primary and secondary education-structural issues", in Pervez Hoodbhoy (ed), _Education and the State: Fifty Years of Pakistan_ (Oxford UP, Karachi, 1998), pp. 78, 81-82, 81. ____________________________________________________________ Thought du jour: the Christian church and education Did not Jesus ask his followers to love their enemies? Christians learned to hate them. The death penalty for heresy was officially sanctioned by the church, Pope Leo the Great in the fifth century being the first pope to endorse it. .... [The mediaeval church] had its own civil and criminal courts, dungeons and gibbets. Its courts had wider powers than those of lay princes. It owned one-quarter of the land of Europe, and the state could not tax it. It determined the basis of economic life. It controlled all charity. Above all, it controlled ideas through its control of education, one of those ideas being that of the supremacy of church power. .... From the twelfth century onward, modern national states slowly emerged, and the power of the church declined. Since the beginning of the nineteenth century, the secular state has, largely by education, controlled the lives of individuals for the glory and power of the state, as the church once did for its glory and power. But the tendency to secularise education in the interest of the modern state has created a serious concern in some people for the religious and moral education of children. That problem some states have solved in one way and some in another but, in no case, to everyone's satisfaction. James Mulhern, _A History of Education: A Social Interpretation_ (second edition, New York, Ronald Press, 1959), pp 219-221. ____________________________________________________________ Thought du jour: globalisation and corporate power Contrary to global salvationist assertions, it is not the case that globalisation has brought with it ‘social exclusion’, nor has it 'marginalised' poor countries. Again, it has not brought disproportionate benefits to the multinationals in particular, nor has it increased their power to influence events while reducing that of governments. To the contrary: governments retain their capacity to act, while in recent years privatisation, deregulation and the freeing of crossborder trade and capital flows have combined to reduce the economic power of businesses by making markets more open and competitive. The idea that corporations are now morally compelled to take on new and wider national and international responsibilities, because they have become more powerful while governments have become weaker, has no basis. Yet it has been uncritically repeated by business executives, business organisations, and others in the business world. David Henderson, "Corporate Social Responsibility, True and False", The Templeton Forum On Markets and Morality, 15 November 2001. http://www.iea.org.uk/files/570.pdf ____________________________________________________________ Thought du jour: civic education in imperial China [T]he Ming dynasty, by ordering the China-wide establishment of community schools for every fifty households after 1375 A.D., had created a practical prototype of universal education, which--in its objectives, the ages of its intended pupils, and its compulsoriness--resembled modern school systems. (pp. 3-4) Almost certainly the chief explanation of what achievements in elementary education did occur in [late imperial China] ... was the strong taste various ... emperors and school builders alike had for a civilizing mission aimed against the heterogeneous moral, cultural, and linguistic habits of a sprawling empire. (p. 18) Pursuing an ethos of alikeness from one end of China to the other, paternalistic ... educators were not formally concerned with differences in various localities' own economic and social demand for education. Ideally, there were not supposed to be any such differences. (p. 24) Alexander Woodside, "Some Mid-Qing Theorists of Popular Schools", Modern China, vol. 9, no. 1 (1983), pp. 3-35. ____________________________________________________________ Thought du jour: when government schools are not public The problem in the United States is that we never had public education. We have education of all sorts, but none of it is public, at least if you mean by "public" that ordinary people have access to the institutions, as in the case of the library, the museum, the streets, the courts, the golf courses, the stadia, and so on. What we have instead is a system in which people like you and me come to Falls Church or whatever the appropriate parallel suburb would be in New York City or Detroit and buy our way in. We have our voucher: it's called the deed to our house, and we buy our way in to a good school. Alternately, we live in the city, and we go to a private school. And that's fine. Either way, we have a market all ready for us. The poor, by contrast, have conscription. They are sent off to a school not of their choosing but according to their address. The idea that our state institutions must take all people is, of course, nonsense. They take the people who can afford to live in their neighborhood, and they don't take people who live outside. If you try to get into a school in Orinda or Beverly Hills and you live in Los Angeles, let me tell you it's not so easy. In fact, our private sector schools are, in that respect, much more open. John E. Coons, speaking in a panel on "The pro-voucher left and the pro-equity right", Annals of the American Academy of Political and Social Science 572 (November 2000), pp. 98- 114. ____________________________________________________________ Thought du jour: medical care The only G7 country without a universal health insurance program is the United States, although it does have a program for the elderly (Medicare) and a program for the poor (Medicaid). Indeed, within the OECD (prior to its recent expansion), only Turkey and the United States were without universal insurance coverage. (p. 883) David M. Cutler, "Equality, efficiency, and market fundamentals: the dynamics of international medical-care reform", Journal of Economic Literature (September 2002), pp. 881-906. That any sane nation, having observed that you could provide for the supply of bread by giving bakers a pecuniary interest in baking for you, should go on to give a surgeon a pecuniary interest in cutting off your leg, is enough to make one despair of political humanity. George Bernard Shaw, _The Doctor's Dilemma_ (New York, 1911), cited in Cutler, op. cit., p. 886, note 8. ____________________________________________________________ Thought du jour: civic education What characterizes a liberal political order is not shared political commitments but institutions which enable people whose moral, religious, cultural, *and political* commitments differ. ... [I]t is hard to see how a liberal society can also be committed to inculcating particular values or virtues in its citizens. It might prohibit activity that prevented others from exercising the liberals rights or freedoms which all would otherwise enjoy. But this would still be a long way from trying to instill liberal values in the citizenry. Liberalism does not run re- education camps. (p. 328) In the end, civic education may be a greatly overrated idea. A liberal state has no need of it. The greater danger to the liberal state that ought to be given serious consideration, however, is the danger posed by any suppression of dissenting views, even if only in the mild form of attempting to engineer some kind of political conformity. (p. 329) Chandra Kukathas, "Education and citizenship in diverse societies", International Journal of Educational Research 35 (2001), pp. 319-330. ____________________________________________________________ Thought du jour: school finance and school governance [K]ids and schools did not just appear on the scene five decades ago, and neither did the debate over school governance. That point is most sharply driven home by a letter from a successful lawyer, outlining his views on schooling. He was born in the early sixties in a small town and lamented the fact that it didn't have a high-school, so he decided to found one himself. But rather than fully endowing the new school, which he could easily have afforded to do, he chose to supply only a third of the necessary funds. In his letter, he explained his decision this way: I would promise the whole amount were I not afraid that someday my gift might be abused for someone's selfish purposes, as I see happen in many places where teachers' salaries are paid from public funds. There is only one remedy to meet this evil: if the appointment of teachers is left entirely to the parents, and they are conscientious about making a wise choice through their obligation to contribute to the cost. People who may be careless about another person's money are sure to be careful about their own, and they will see that only a suitable recipient shall be found for my money if he is also to have their own... I am leaving everything open for the parents: the decision and choice are to be theirs-all I want is to make the arrangements and pay my share. What's remarkable about his letter isn't so much its contents as its context. As I said, it's author was born in the early sixties--not the early 1960s or the early 1860s, but the early 60s of the first century A.D. His name was Pliny the Younger, and he was a citizen of the Roman Empire. Andrew J. Coulson, "Forgotten Lessons", June 13th, 1997. http://www.schoolchoices.org/roo/harvard.htm [See also Coulson's 1999 book, "Market Education: The Unknown History".] The public can facilitate this acquisition [of basic education] by establishing in every parish or district a little school, where children may be taught for a reward so moderate, that even a common laborer may afford it; the master being partly, but not wholly paid by the public; because, if he was wholly, or even principally paid by it, he would soon learn to neglect his business. -- Adam Smith, 1776 [Adam Smith appears to have been familiar with the letters of Pliny the Younger!] ____________________________________________________________ Thought du jour: Herb Gintis on school choice Education is one of the few areas of economic life where the model of "regulated competitive delivery" has not penetrated to an appreciable extent. In most market economies the whole range of educational services is delivered by government monopolies, although families who can afford to do so are permitted to opt for private schools. The United States and Canada are among the few countries that have many nonstate providers of higher education. Despite the effectiveness of this system, it is not yet widely copied by other countries. (p. 11) .... The government must provide some services monopolistically, because the market failures involved in competitive delivery are excessively costly. Examples include tax collection, police protection, national defense, and regulatory agencies. In each case we can provide compelling reasons why competitive delivery would not work. No such reasons can be given in the case of educational services. Indeed, ... competitive delivery of educational services should better meet the private needs of parents and children, while fulfilling the educational systems traditional social functions as well. People have rather prosaic goals for schools: reading, writing, history, math, and science, punctuality and self- discipline. When they are dissatisfied with what they are getting, they would doubtless benefit from having the power to induce the school to change, using the threat of taking their "business" elsewhere. The existing educational system disempowers parents by obliging them to initiate a complex political dynamic (influence the school board, affect the outcome of a local election, initiate a court battle) against great odds to induce their providers to change. (p. 18) Herbert Gintis, "The Political Economy of School Choice", Teachers College Record, 96:3 (Spring 1995). http://www.tcrecord.org (free, but requires registration) [Gintis is coauthor, with Samuel Bowles, of _Schooling in Capitalist America_ (Basic Books, New York, 1976). He teaches economics at the University of Massachusetts, Amherst, a state provider of higher education.] ____________________________________________________________ Thought du jour: discipline of students in ancient Egypt Discipline in the schools [of ancient Egypt] was severe. Flogging was a universal practice. For some violations of rules, or neglect of duty, boys were bound in shackles and sentenced to the temple or school prison for as long as three months, for the Egyptians believed, as did the Hebrews after them, that a boy must be trained and broken as are horses or donkeys, a belief that continued in Western thought until our own day. James Mulhern, _A History of Education: A Social Interpretation_ (second edition, New York, Ronald Press, 1959), p. 74. ____________________________________________________________ Thought du jour: education as indoctrination [T]he less educated ... tend to be more sophisticated and perceptive about these matters, the reason being that education is a form of indoctrination, and the less educated are less indoctrinated. Furthermore, the educated tend to be privileged and they tend to have a stake in the doctrinal system, so they naturally tend to internalize and believe it. As a result, not uncommonly and not only in the United States, you find a good deal more sophistication among people who learn about the world from their experience rather than those who learn about the world from a doctrinal framework that they are exposed to and that they are expected as part of professional obligation to propagate. Noam Chomsky, Language and politics (Black Rose Books, New York, 1988), p. 708. ____________________________________________________________ Thought du jour: the new instititutionalists In the last decade or two, both the Social Democrat and the libertarian versions of market economics have been challenged -- not just by traditional socialiiists or conservatives who dislike change -- but by a school of "new institutionalists", of whom the most prominent member is the Nobel prize winner Douglass North. They pay a lot of attention to history and institutions: to questions such as why China has been more successful in moving towards a market economy than Russia, despite greater Russian willingness to remove controls. The new institutionalists remind us that there is no shortage of markets or self seeking behaviour in areas which have failed to achieve an economic takeoff, whether in West Africa or in southern Italy. What they lack in such places is the basis of trust and institutions which would enable them to make long-term contracts and refrain from Mafia-type raiding on each other. Samuel Brittan, "How economics can be seen as religion" Financial Times 15/08/02 http://www.samuelbrittan.co.uk/text121_p.html ____________________________________________________________ Thought du jour: education of the poor in the USA There is certainly no question that public education currently allows extreme differences in per- pupil expenditures between rich and poor districts. Even if privatization were not likely to increase this inequality, which it is, it should be resisted. For while education is a public enterprise, the current inequalities need to be justified..... Under the regime of the market ..., inequality would no longer require a justification. What would be abandoned in the move to distribution of education through the market would be the commitment to substantial equality. The market distributes things unequally, but that is not usually seen as a problem with most commodities. In a market regime it would cease to be a problem if some few children had the equivalent of a four star education, while most others went to McSchools. This sort of unequal distribution is, after all, what markets are supposed to do, and each child would have the school she "chose," or that her parents "chose" for her. John Covaleskie, "On Education and the Common Good: A Reply to Coulson" Education Policy Analysis Archives, Volume 2 Number 11, August 10, 1994 http://olam.ed.asu.edu/epaa/v2n11.html This argument ignores the fact that a competitive educational market in which poor families are given vouchers, shows just as much concern for their welfare as does the institution of public schooling. The primary change is simply the means of delivery. In fact, such a system would show a far more genuine concern for the welfare of the disadvantaged because it would provide them with a better quality of education than the current system is capable of offering. .... In order to truly improve the education of the poor it is necessary to substitute the demonstrably more effective competitive market for the current bureaucratic monopoly. Andrew J. Coulson, "A Response to John Covaleskie", Education Policy Analysis Archives, Volume 2 Number 12, August 10, 1994 http://olam.ed.asu.edu/epaa/v2n12.html Are the supermarkets available to different economic groups anything like so divergent in quality as the schools? Vouchers would improve the quality of the public schooling available to the rich hardly at all; to the middle class, moderately; to the lower-income class, enormously. M. Friedman and R. Friedman, _Free to Choose_ (New York, 1980) p. 169. ____________________________________________________________ Thought du jour: the legacy of Aristotle His [Aristotle's] views, and those of Plato, on state education crept into Roman law, into the philosophy of Thomas Aquinas and Luther and, eventually, into modern educational practice. And the position he took on the nature of women probably contributed to their long- continued subjugation in the West. Most of his physical theories were unsound, e.g., his doctrine that earth, fire and water are the basic elements of earthly things, and ether of celestial bodies; that earthly motion is a straight line, and heavenly motion is circular; and that weight determines the speed of falling bodies. And there were basic errors in his theories of biology and anatomy. Had the world, however, learned from him, as it might well have done, the value of critical thinking, instead of using his authority to stifle that spirit, the discoveries of recent times might not have been so long delayed. James Mulhern, _A History of Education: A Social Interpretation_ (second edition, New York, Ronald Press, 1959), p. 173. The citizen should be molded to suit the form of government under which he lives. For each government has a peculiar character which originally formed and which continues to preserve it. The character of democracy creates democracy, and the character of oligarchy creates oligarchy; and always the better the character, the better the government. ...[I]t is manifest that education should be one and the same for all, and that it should be public, and not private- not as at present, when every one looks after his own children separately, and gives them separate instruction of the sort which he thinks best; the training in things which are of common interest should be the same for all. Neither must we suppose that any one of the citizens belongs to himself, for they all belong to the state, and are each of them a part of the state, and the care of each part is inseparable from the care of the whole. Aristotle, Politics (350 BCE), Book Eight, Part I (translated by Benjamin Jowett). ____________________________________________________________ Thought du jour: more on Aristotle Aristotle believed that, contrary to the common practice of his day, education was the responsibility of the state. What he works out is therefore a genuine education policy. (p. 43) Schools should be public. Here Aristotle, like Plato, was far ahead of his time. For the education of children in the Greek _polis_ was a matter for the family. With the exception of physical education and military instruction, all forms of tuition were private. The introduction of public education always indicates a certain democratisation of education. "Education must be one and the same for all." (p. 44) Nevertheless, this democratic form of education has its limits in that it is reserved for the children of citizens. .... There is no access for the children of agriculturalists, artisans or retail traders. As for slaves, they are not considered as complete human beings in any case. .... [Similarly,] in Aristotle's view, women are certainly not the equals of men. By their very nature they are destined to obey and therefore not free. (p. 44) Aristotle's theory of education has lost none of its relevance. His observations on educational policy and its role in society, ... and his educational ideas have much in common with the concerns of those responsible for education today. (p. 50) Charles Hummel, "Aristotle", Prospects (UNESCO, Paris), vol. 23, no. 1/2, 1993, pp. 39-51. http: //www.ibe.unesco.org/International/Publications/Thinkers/Thin kersPdf/aristote.pdf [Mr Hummel, a national of Switzerland, was Permanent Delegate to UNESCO (1970-1987), Member of the Executive Board of UNESCO, and Ambassador to Ireland (1987-1992).] ____________________________________________________________ Thought du jour: the case against school choice, 1524 and 1994 [T]he great majority of parents unfortunately are wholly unfitted for this task [of educating the young]. They do not know how children should be brought up and taught, for they themselves have learned nothing but how to care for their bellies. It takes extraordinary people to bring children up right and teach them well. .... It therefore behoves the council and the authorities to devote the greatest care and attention to the young. (p. 355) Martin Luther, "To the councilmen of all cities in Germany that they establish and maintain Christian schools [1524]", translated by A. Steinhaeuser in _Luther's Works_, vol. 45 (Muhlenberg Press, Philadelphia, 1962), pp. 347-378. Covaleskie: We live in a society where Beavis and Butthead are not just watched by kids, but are a cultural phenomenon; where kids spend their allowance on music that glorifies violence and demeans women, and parents allow that; and where one of the most popular video games shows the winner tearing the still-beating heart out of the loser. May I humbly offer these in evidence that the occasional parent makes foolish-- downright stupid--choices on behalf of their children. .... To "reform" education by empowering parents and disempowering the community seems to me to put these children, the most vulnerable, at risk. "School Choice: A Discussion with Herbert Gintis", Education Policy Analysis Archives, Volume 2 Number 6, February 20, 1994 http://olam.ed.asu.edu/epaa/v2n6.html [John F. Covaleskie is Assistant Professor of Education at Northern Michigan University in Marquette, MI. He is a philosopher of education with interests in public policy, moral education, and school reform.] ____________________________________________________________ Thought du jour: the consequences of protectionism Only 13 years after his manifesto for economic self- sufficiency, Raul Prebisch offered this disillusioned assessment of the consequences of taking his advice: "the proliferation of industries of every kind in a closed market has deprived the Latin American countries of the advantages of specialization and economies of scale, and owing to the protection afforded by excessive tariff duties and restrictions, a healthy form of internal competition has failed to develop, to the detriment of efficient production." One is tempted to ask: And this was a surprise? Brink Lindsey, _Against the Dead Hand: The Uncertain Struggle for Global Capitalism_ (New York: John Wiley, 2002), p. 104. [The Prebisch quote is from his _Towards a dynamic development policy for Latin America_ (New York: United Nations, 1963), p. 71.] ____________________________________________________________ Thought du jour: Herb Gintis on competition in education Herbert Gintis: I think economic concepts apply quite well to education-- it's a service like any other. Teachers don't like competition because like any reasonable actor holding a monopolistic position they would rather not have to face the cruel world in which people are accountable for their actions. There is no other way to render education accountable, as far as I know, than to subject it to competitive pressures. Such a flexible system also allows communities and parents (and entrepreneurs) to control their own educational resources. I suspect such a system would lead to a burst of creative community efforts. John Covaleskie: Competition implies that there are winners and losers. The fact that that is a good thing in tennis does not imply anything about its goodness in education. Gintis: If you think it would be good to have an educational system without winners and losers, I would like you to explain this system to me. I find the idea mildly absurd and morally distasteful. I guess I think progressives have moved from a reasonable abhorrence to poverty and socially unproductive wealth inequality to a dislike of unequal outcomes. It reminds me of those who hate alcoholism who then think abstinence is a virtue. "School Choice: A Discussion with Herbert Gintis", Education Policy Analysis Archives, Volume 2 Number 6, February 20, 1994 http://olam.ed.asu.edu/epaa/v2n6.html [In 1976, Gintis published, with Samuel Bowles, Schooling in Capitalist America. They still teach economics at the University of Mass., Amherst.]] ____________________________________________________________ Thought du jour: illegal drugs [G]overnments allow their citizens the freedom to do many potentially self-destructive things: to go bungee-jumping, to ride motorcycles, to own guns, to drink alcohol and to smoke cigarettes. Some of these are far more dangerous than drug- taking. John Stuart Mill was right. Over himself, over his own body and mind, the individual is sovereign. Trade in drugs may be immoral or irresponsible, but it should no longer be illegal. Frances Cairncross, SURVEY: ILLEGAL DRUGS, The Economist, Jul 26th 2001. http://www.economist.com/surveys/showsurvey.cfm?issue= 20010728 ____________________________________________________________ Thought du jour: F. List on free trade in the tropics A country of the torrid zone would make a very fatal mistake, should it try to become a manufacturing country. Having received no invitation to that vocation from nature, it will progress more rapidly in riches and civilization if it continues to exchange its agricultural productions for the manufactured products of the temperate zone. It is true that tropical countries sink thus into dependence upon those of the temperate zone, but that dependence will not be without compensation, if competition arises among the nations of temperate climates in their manufacturing industry in their trade with the former.... This competition will not only ensure a full supply of manufactures at low prices, but will prevent any one nation from taking advantage by its superiority over the weaker nations of the torrid zone. F. List, _The National System of Political Economy_, translated from the 1841 German original by G.A. Matile (Philadelphia, 1854, pp. 75-76). [Adam Smith would not have made any stronger the case for free trade, though he would have applied it to all countries, not just to those in the tropics. The irony is that it was written by Friedrich List, a 19th century German political activist and sometime academic best known for his support of protection in newly industrializing countries. List has become an intellectual 'guru' for present-day protectionists, including many in the torrid zone who, apparently, have not examined in detail the writings of their master.] ____________________________________________________________ Thought du jour: Gary Becker on economic literacy The American public are frightened by economics. When you mention you are an economist, people say they took an economics course in college and they were terrible at it. I believe an economist should try to get people to relax over economics, should express concepts in simple language and show how to deal with important problems in a fairly simple way. "Interview with Gary Becker", Federal Reserve Bank of Minneapolis, _The Region_, June 2002. http://www.minneapolisfed.org/pubs/region/02-06/becker.cfm ____________________________________________________________ Thought du jour: Samuel Brittan on Bush's war with terrorism I find myself somewhat surprised to be so much on the Bush side [in the war with international terrorism]. I call myself a neo- pacifist because I do not believe in dying either for forms of government or to have rulers of one ethnic or national origin rather than another. The choice between living under the Kaiser and living under Lloyd George was not worth the millions of deaths in the trenches, as Lloyd George himself came to appreciate. And I am old enough to have been opposed to the Vietnam war as well as to the Falklands war and was dubious about the Gulf war. "Neo", because if our very lives and the right to exist are threatened, as my family's were by the Nazis in the second world war and as the whole western world is threatened by al- Qaeda and by rogue states, I believe in fighting back with every available resource. Samuel Brittan: "US is more nearly right" Financial Times, 1 August 2002 www.ft.com ____________________________________________________________ Thought du jour: Krispy Kreme doughnuts [In the Spring 2001 issue] you "spotlight" the arrival of Krispy Kreme doughnuts! Canadians are in the midst of an epidemic of obesity with its other health-related ramifications. Do we need another doughnut? Dr. Ron Gregor, letter to the editor, Queen's Alumni Review, Summer 2002 (vol. 76, no. 3), p. 51. ____________________________________________________________ Thought du jour: Gary Becker on conspicuous consumption I believe social forces are important for many aspects of market behavior. Individuals are not Robinson Crusoes alone on islands. For some problems, the island model is a good metaphor, but for most behavior, people are influenced by what others around them are doing. Look at the popularity of certain books, for example, A Brief History of Time, by [Stephen] Hawking, the great astrophysicist. Well, nobody can understand that book. It sold millions of copies, but essentially nobody understands it. Why do they buy it? Not because they were going to read the book. I have spoken to top physicists who have trouble reading it. So the vast majority of people were buying this book for their coffee table. "Interview with Gary Becker", Federal Reserve Bank of Minneapolis, _The Region_, June 2002. http://www.minneapolisfed.org/pubs/region/02-06/becker.cfm ____________________________________________________________ Thought du jour: Gary Becker on writing styles [F]ew important conclusions of economic analysis cannot be expressed in simple language. The challenge is to find how to do that. Many intellectuals, many economists, use obscure language when they write. Sometimes it is a way of disguising that they are not saying a heck of a lot. "Interview with Gary Becker", Federal Reserve Bank of Minneapolis, _The Region_, June 2002. http://www.minneapolisfed.org/pubs/region/02-06/becker.cfm ____________________________________________________________ Thought du jour: Bauer reviewed by an obstetrician gynaecologist I particularly liked the chapter "Ecclesiastical economics: envy legitimised" dissecting the economic illiteracy of many Papal pronouncements. .... As the Nobel prize-winner Amartya Sen says in his introduction, Bauer's views are now commonplace among development economists. However, as the recent anti-trade protests in Seattle and Prague have shown they have a long way to go to achieve popular acceptance. Until they do many inhabitants of poor countries will continue to have their prospects blighted by well meaning but misguided attempts by western agencies to help. J. G. Thornton, reviewing Peter Bauer, _From Subsistence to Exchange and Other Essays_ (Princeton University Press, 2000), European Journal of Obstetrics & Gynecology and Reproductive Biology, October 2001, p. 260 ____________________________________________________________ Thought du jour: Orwell on rules for writing prose [O]ne needs rules that one can rely on when instinct fails. I think the following rules will cover most cases: 1. Never use a metaphor, simile, or other figure of speech which you are used to seeing in print. 2. Never us a long word where a short one will do. 3. If it is possible to cut a word out, always cut it out. 4. Never use the passive where you can use the active. 5. Never use a foreign phrase, a scientific word, or a jargon word if you can think of an everyday English equivalent. 6. Break any of these rules sooner than say anything outright barbarous. These rules sound elementary, and so they are, but they demand a deep change of attitude in anyone who has grown used to writing in the style now fashionable. George Orwell, "Politics and the English Language", 1946. http://www.resort.com/~prime8/Orwell/patee.html ____________________________________________________________ Thought du jour: compulsory earnings-related pensions Though the preferred mechanism for providing benefits differs between left and right, with (unsurprisingly) the former supporting public provision and the latter private, funded schemes, both sides appear to believe that some form of compulsory earnings-related provision is desirable. In other words, both left and right support the idea that, on top of its responsibility to ensure a minimum income, the state should also be in the business of protecting individuals' accustomed living standards. This widespread acceptance of an earnings-replacement objective for pension policy is a paradox. The left's traditional concern with equality suggests that the minimum income should be the focus for attention--on the face of it, there is little reason why they should support earnings- related social-insurance schemes which tend to perpetuate inequalities from working life into old age. And the position of the right is, if anything, even more puzzling. In spite of their rhetoric about paring down the role of the state (most evident in the USA), free-marketeers have emerged as one of the main supporters of the Chilean model for pension provision. As this system forces people to accumulate an earnings- related pension, it too extends the state's ambit into protecting accustomed living standards, counter to the minimalist, laissez-faire stance one might have expected. Phil Agulnik, "Maintaining incomes after work: do compulsory earnings-related pensions make sense?", Oxford Review of Economic Policy, Vol 16, no. 1 (Spring 2000), p. 47. ____________________________________________________________ Thought du jour: praise of the bourgeoisie by Marx and Engels The bourgeoisie has subjected the country to the rule of the towns. It has created enormous cities, has greatly increased the urban population as compared with the rural, and has thus rescued a considerable part of the population from the idiocy of rural life. .... The bourgeoisie, during its rule of scarce one hundred years, has created more massive and more colossal productive forces than have all preceding generations together. Subjection of nature's forces to man, machinery, application of chemistry to industry and agriculture, steam navigation, railways, electric telegraphs, clearing of whole continents for cultivation, canalization or rivers, whole populations conjured out of the ground -- what earlier century had even a presentiment that such productive forces slumbered in the lap of social labor? Manifesto of the Communist Party (1848) By Karl Marx and Fredrick Engels www.marxists.org/archive/marx/works/download/manifest.doc ____________________________________________________________ Thought du jour: Aristotle on public versus private education The citizen should be molded to suit the form of government under which he lives. For each government has a peculiar character which originally formed and which continues to preserve it. The character of democracy creates democracy, and the character of oligarchy creates oligarchy; and always the better the character, the better the government. ...[I]t is manifest that education should be one and the same for all, and that it should be public, and not private- not as at present, when every one looks after his own children separately, and gives them separate instruction of the sort which he thinks best; the training in things which are of common interest should be the same for all. Neither must we suppose that any one of the citizens belongs to himself, for they all belong to the state, and are each of them a part of the state, and the care of each part is inseparable from the care of the whole. Aristotle, Politics (350 BCE), Book Eight, Part I (translated by Benjamin Jowett). A general State education is a mere contrivance for moulding people to be exactly like one another: and as the mould in which it casts them is that which pleases the predominant power in the government, whether this be a monarch, a priesthood, an aristocracy, or the majority of the existing generation, in proportion as it is efficient and successful, it establishes a despotism over the mind, leading by natural tendency to one over the body. An education established and controlled by the State, should only exist, if it exist at all, as one among many competing experiments, carried on for the purpose of example and stimulus, to keep the others up to a certain standard of excellence. John Stuart Mill, On Liberty (1859), chapter V. ____________________________________________________________ Thought du jour: Upton Sinclair in praise of capitalism L]ike Karl Marx in The Communist Manifesto, he [Upton Sinclair] couldn't help being exceedingly impressed by the dynamic, innovative, and productive energy of capitalism: No tiniest particle of organic matter was wasted in Durham's. Out of the horns of the cattle they made combs, buttons, hair-pins, and imitation ivory; out of the shin bones and other big bones they cut knife and tooth- brush handles, and mouthpieces for pipes; out of the hoofs they cut hair-pins and buttons, before they made the rest into glue. From such things as feet, knuckles, hide clippings, and sinews came such strange and unlikely products as gelatin, isinglass, and phosphorus, bone-black, shoe- blacking, and bone oil. They had curled-hair works for the cattle-tails, and a "wool- pullery" for the sheep-skins; they made pepsin from the stomachs of the pigs, and albumen from the blood, and violin strings from the ill-smelling entrails. When there was nothing else to be done with a thing, they first put it into a tank and got out of it all the tallow and grease, and then they made it into fertilizer. This account of the magnificent profusion that results from the assembly line and the division of labor is so awe- inspiring that Sinclair seems impelled to follow it almost at once with a correct and ironic discourse on the nature of monopoly and oligopoly Christopher Hitchens, "A Capitalist Primer: Upton Sinclair's realism got the better of his socialism", The Atlantic Monthly, July/August 2002. http://www.theatlantic.com/issues/2002/07/hitchens.htm [Hitchens, in this review of Sinclair's novel, The Jungle, describes it as "the most successful attempt ever made to fictionalize the central passages of Marx's Das Kapital."] ____________________________________________________________ Thought du jour: 'neoliberal' education policy And while individuals may feel passion and want to nurture positive social change, The Bank is a bank and does take an accountant's view. This particular accountant's view comes from an ideologically chosen neoliberal framework that, if anything, is passionate about policies that nurture the movement of foreign capital and wealth accumulation for the rich. .... Neoliberalism leads to a supply-side educational policy that says, if we supply education, the market will take care of the demand for educated people, that is, jobs. .... A capitalist free market has never and will never provide jobs for all, and certainly not decent jobs for all. Steven J. Klees, "World Bank education policy: new rhetoric, old ideology," International Journal of Educational Development, in press, 2002. [The author of this remarkable essay is a trained economist (MA and PhD from Stanford) who has been consultant to the World Bank and is currently Professor of Education Policy and Leadership at the College of Education, University of Maryland. He does not provide readers with any reference to support his allegation that 'The Bank' or unnamed 'neoliberals' believe that Say's Law applies to labour markets. I myself am skeptical that anyone, of any ideological persuasion, might hold such a belief. --LW] ____________________________________________________________ Thought du jour: business ethics in 1776 Merchants and master manufacturers are, in this order, the two classes of people who commonly employ the largest capitals, and who by their wealth draw to themselves the greatest share of the public consideration. As during their whole lives they are engaged in plans and projects, they have frequently more acuteness of understanding than the greater part of country gentlemen. .... Their superiority over the country gentleman is, not so much in their knowledge of the public interest, as in their having a better knowledge of their own interest than he has of his. .... The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it. Adam Smith, Wealth of Nations (1776), book I, ch.11, Of the Rent of Land in paragraph I.11.264 [Has anything changed? --LW] ____________________________________________________________ Thought du jour: literacy (1) [R]ecent work in economic history and development has begun to contradict the received wisdom that education is central to the process of industrialization and that it must logically precede a 'take-off into sustained growth.' Education and economic growth ... need not be collateral or sequential processes; productivity and wealth do not necessarily follow from mass literacy, as the histories of Sweden and Scotland demonstrate. Both achieved near universal literacy before the nineteenth century, but both remained desperately poor. Harvey J. Graff, The Labyrinths of Literacy: Reflections on Literacy Past and Present (Revised and Expanded Edition, University of Pittsburgh Press, 1995), p. 52. [Kerala State in India is a 20th century example of the same: widespread literacy followed by stagnation. --LW] ____________________________________________________________ Thought du jour: literacy (2) The role of churches and missionaries (including Catholics) in education, home and abroad, must not be overlooked. ... [T]he Bible served as the vehicle for indoctrination, the moral message deriving from the pages of the printed Scriptures. This was neither an intellectual nor a liberating act; it was primarily ritualistic, with the level of literacy required often quite minimal. Harvey J. Graff, The Labyrinths of Literacy: Reflections on Literacy Past and Present (Revised and Expanded Edition, University of Pittsburgh Press, 1995), p. 40 ____________________________________________________________ Thought du jour: literacy (3) What would happen if the whole world became literate? Answer: not so very much, for the world is by and large structured in such a way that it is capable of absorbing the impact. But if the world consisted of literate, autonomous, critical, constructive people, capable of translating ideas into action, individually and collectively--the world would change. Johan Galtung, 1976, cited in Harvey J. Graff, The Labyrinths of Literacy: Reflections on Literacy Past and Present (Revised and Expanded Edition, University of Pittsburgh Press, 1995), p.25. ____________________________________________________________ Thought du jour: education, poverty and terrorism In December 2001, Palestinians were asked whether they supported attacks on Israeli civilian and military targets, and about whether they considered certain incidents acts of terrorism. Breaking down the data by education and occupation indicates that support for violence against Israeli targets is widespread in the Palestinian population, and at least as great among those with higher education and higher living standards as it is among the unemployed and the illiterate. Similarly, a review of the incidence of major terrorist acts over time in Israel, and an analysis that relates the number of terrorist acts each year to the rate of economic growth in that year or in the recent past, yields the same skepticism about the idea that poverty is a cause of terrorism. ... [L]ess quantitative studies of participants in a variety of forms of terrorism in several different settings have reached a conclusion similar to ours. We are particularly struck by Charles Russell and Bowman Miller's .... [study of] demographic information on more than three hundred fifty individuals engaged in terrorist activities in Latin America, Europe, Asia, and the Middle East from 1966 to 1976. .... [They] found that "the vast majority of those individuals involved in terrorist activities as cadres or leaders is quite well educated. In fact, approximately two- thirds of those identified terrorists are persons with some university training, university graduates or postgraduate students." They also report that more than two-thirds of arrested terrorists "came from the middle or upper classes in their respective nations or areas." .... On the whole, we must conclude that there is little reason to be optimistic that a reduction in poverty or increase in educational attainment will lead to a meaningful reduction in the amount of international terrorism without other changes. Alan B. Krueger & Jitka Maleckova, THE ECONOMICS AND THE EDUCATION OF SUICIDE BOMBERS: Does Poverty Cause Terrorism? New Republic, 24 June 2002. http://www.thenewrepublic.com/docprint.mhtml?i=20020624&s= krueger062402 ____________________________________________________________ Thought du jour: democracy and control of public schools The fundamental point to be made about parents and students is not that they are politically weak, but that, even in a perfectly functioning democratic system, the public schools are _not meant_ to be theirs to control and are literally _not supposed_ to provide them with the kind of education they might want. The schools are agencies of society as a whole, and everyone has a right to participate in their governance. Parents and students have a right to participate too. But they have no right to win. In the end, they have to take what society gives them. John E. Chubb and Terry M. Moe, _Politics, Markets and America's Schools_ (Brookings, Washington, DC, 1990) p. 32. ____________________________________________________________ Thought du jour: The Political Theory of Schools and Prisons "Freshman Seminar 83: The Political Theory of Schools and Prisons Spring 2002 Wednesdays, 3-6pm Dr. Christopher Sturr sturr@fas.harvard.edu Course description: This seminar will examine political theories of modern democratic social institutions, focusing in particular on schools and prisons. In what ways are schools and prisons similar, and in what ways are they different? http://www.fas.harvard.edu/~seminars/fs/Sturrsyl.html [No, I did not make this up! It is a serious course. --LW] ____________________________________________________________ Thought du jour: mass education in Mao's China This is an interesting and informative book on a still controversial topic. .... Seeberg's ... conclusion is that, despite thirty years of revolutionary promise to educate the masses and much effort expended to the point of violence ..., overall literacy among the masses increased only a little. WJ Morgan, review of Vilma Seeberg, _The Rhetoric and reality of Mass Education in Mao's China_ (Edwin Mellen Press, Lampeter, Wales, UK, 2000), in International Journal of Educational Development, forthcoming, 2002. ____________________________________________________________ Thought du jour: Mokyr on telecommuting Technology, now as in the past, opens doors; it does not force society to walk through them. .... [I]n modern age, a sorting principle will be operational: more and more of those workers who prefer to work in centralized settings, or who would not be as productive at home for one reason or another, will be able to maintain the status quo. This is an option the handloom weavers, the frame knitters, and the nailmakers of the nineteenth century never had. Joel Mokyr, "The rise and fall of the factory system: technology, firms and households since the industrial revolution", Carnegie-Rochester Conference Series on Public Policy 55 (2001), pp. 37-38. ____________________________________________________________ Thought du jour: The 'pseudo-science' looks at education After a long and distinguished career in journalism and consular representation, Her Excellency the Governor-General has concluded that economics as it is currently practiced is a "pseudo-science." She said so Tuesday in a speech in Ottawa that you can read at www.irpp.org, under "What's new? ". .... (Her Excellency, who sees economists' widespread belief that markets are efficient as an essentially religious impulse, ... also believes education should be delivered only through the public sector, an opinion that is no doubt interesting, but whose expression in public is both offensive to the growing number of Canadian parents who have opted out of public education, and, not incidentally, violates her constitutional obligation not to practice politics.) William Watson, "The 'pseudo-science' looks at education", Financial Post, 31 May 2002. www.nationalpost.com ____________________________________________________________ Thought du jour: old age pensions and democracy Assisting the elderly has captured much of the attention, and resources, of the government in recent decades. Public pension expenditures are a big component of that assistance and, for example, have exceeded 10% of GDP in several countries. (p. 1) Public pensions are paid to old people, so it may be important to know how many people are old. (p. 14) [H]olding constant the fraction of the population over age 65 and GDP per capita, we find no systematic evidence that democratic governments spend a larger share of GDP on Social Security, or differently adjust their spending to economic and demographic trends. Cross-country econometric estimates suggest that the effect of democracy may be to _lower_ Social Security spending's share of GDP by 0.9 percentage points. (p. 37) Casey B. Mulligan, Ricard Gil and Xavier Sala-i-Martin, "Social Security and Democracy", NBER Working Paper 8958 (May 2002). [NB: The authors use the term "social security" in its American sense, meaning old age pensions only, not health care or unemployment insurance. -- LW] ____________________________________________________________ Thought du jour: fiscal policy and democracy We were surprised to find that the character of the political system does not seem to matter in terms of fiscal policy once we control for income. We can only find one fiscal variable that is statistically different between democracies and non- democracies after controlling for income: aid revenue (which, presumably, says more about the behavior of donors than recipients). W. Easterly and S. Rebelo, "Fiscal policy and economic growth: an empirical investigation", Journal of Monetary Economics (December 1993), pp. 417-458. (Also available as NBER Working Paper No. 4499.) ____________________________________________________________ Thought du jour: famous forecast of a famous economist The end of the decline of the Stock Market will ... probably not be long, only a few more days at most. Irving Fisher, US economist, 14 November 1929. Thought du jour:39 39 .. This appears to be the first uninteresting number, which, of course makes it an especially interesting number, because it is the smallest number to have the property of being uninteresting. It is therefore also the first number to be simultaneously interesting and uninteresting. David Wells, 1986. The Penguin Dictionary of Curious and Interesting Numbers. Thought du jour: the market for computers I think that there is a world market for about five computers. Thomas J. Watson, Chairman of the Board-IBM, 1943 ____________________________________________________________ Thought du jour: tecnological change in the computer industry Where a calculator on the ENIAC is equipped with 18,000 vacuum tubes and weighs 30 tons, computers in the future may have only 1,000 vacuum tubes and perhaps weigh only 1.5 tons. Popular Mechanics, March 1949 ____________________________________________________________ Thought du jour: Mao Tse-tung on government expenditure Thrift should be the guiding principle in our government expenditure. - Mao Tse-tung Quote for the Day, Adam Smith Institute, 28/5/2002. http://www.adamsmith.org.uk/ ____________________________________________________________ Thought du jour: the School as an ideological State apparatus [O]ne ideological State apparatus certainly has the dominant role, although hardly anyone lends an ear to its music: it is so silent! This is the School. It takes children from every class at infant-school age, and then for years, the years in which the child is most 'vulnerable', squeezed between the family State apparatus and the educational Statue apparatus, it drums into them, whether it uses new or old methods, a certain amount of 'know-how' wrapped in the ruling ideology (French, arithmetic, natural history, the sciences, literature) or simply the ruling ideology in its pure state (ethics, civic instruction, philosophy). .... Of course, many of these contrasting Virtues (modesty, resignation, submissiveness on the one hand, cynicism, contempt, arrogance, confidence, self-importance, even smooth talk and cunning ...) [that the School provides] are also taught in the Family, in the Church, in the Army, in Good Books, in films and even in the football stadium. But no other ideological State apparatus has the obligatory (and not least, free) audience of the totality of the children in the capitalist social formation, eight hours a day for five or six days out of seven. Louis Althusser, "Ideology and Ideological State Aparatuses", in Lenin and Philosophy and other Essays, translated by Ben Brewster (Monthly Review Press, New York, 1971), pp. 155, 156. This essay was first published in La Pensée, 1970. ____________________________________________________________ Thought du jour: Corruption of a school-meal programme The national school-meal programme is a good example of how a well-intentioned intervention degenerates into a farce due to bureaucratic apathy and corruption. A district collector, posted in Bihar, India. Quoted in PROBE Team, _Public Report on Basic Education in India_ (Oxford University Press, New Delhi, 1999), p. 96. And when food rations are actually distributed, it is usually at the end of a long chain of corruption and red tape. While the standard entitlement is three kilogrammes per child per month, many parents complain that they receive much less than that. We note in passing that the teacher who volunteered a bribe to the PROBE investigators (see p. 61) offered a sack of grain from the dry-rations scheme. PROBE Team, _Public Report on Basic Education in India_ (Oxford University Press, New Delhi, 1999), p. 96. ____________________________________________________________ Thought du jour: The government school in a village of northern India Six-year old Reena is not keen to go to school in the morning, and it is not difficult to understand why. When the PROBE investigators visited her school in Salempur ..., they found the little children of classes 1 and 2 herded together like sheep and goats. The other children crowded the three small, dark and dirty rooms which make up the school building. The premises were gloomy and virtually bare, not a great surprise since the building has no lock. The school's four teachers are equally unmotivated. Except for the headmaster, none of them were teaching when the investigators arrived. The class-1 teacher did not look as though he had anything to do with his small charges. Villagers, for their part, have strong charges against the teachers, from neglecting their teaching duties to playing cards during school hours. ... [I]t is not that the people of Salempur are not keen on educating their children. Three private schools have sprung up in the village, and those who can afford it send their children there. But children like Reena come from very poor families. They continue to crowd the government primary school -- or drop out. PROBE Team, _Public Report on Basic Education in India_ (Oxford University Press, New Delhi, 1999), pp. 38-39. ____________________________________________________________ Thought du jour: Colonial legacies in education [I]n colonized societies like India, the modern state apparatus took shape under the auspices of, and generally to fulfill the purposes of, colonial rule. In education, colonization meant the replacement of indigenous institutions of learning, including village schools by a new structure of state-supported institutions. Though sporadic efforts were made to incorporate the older systems into the new one, ultimately the older systems were destroyed or, in some cases, marginalized. Krishna Kumar, "Colonial legacies", in _Public Report on Basic Education in India_ (Oxford University Press, New Delhi, 1999), p. 85. ____________________________________________________________ Thought du jour: the politics of education vouchers These are the traditional pillars of the [education] voucher movement: conservatism and religion. And had they remained the only pillars, it is questionable whether vouchers would now be a major force in American politics. The pivotal event came in 1990. In that year, the Wisconsin legislature adopted a pilot voucher program, the nation's first, for low-income children in Milwaukee. The movement was home grown, rooted in the realities of urban education and not in conservatism, the theory of markets, or religion. A contingent of poor, minority parents in inner-city Milwaukee, fed up with the sorry state of their schools and led by local activists, rose up and demanded vouchers. The groups that normally claim to represent the urban poor in education and politics-the teachers unions, the Democrats, the National Association for the Advancement of Colored People (NAACP), and other liberal organizations-came out in vigorous, full-force opposition. Abandoned by their usual allies, the leaders of Milwaukee's disaffected parents found support the only place they could- among conservatives and Republicans-and, after a hard-fought battle, this odd coalition ultimately won out. .... Traditionalist ideas remain salient [in the new coalition], and they are central to the movement's self-concept at the upper reaches. Yet increasingly the political action for vouchers focuses on disadvantaged children in inner-city schools, not on the kind of universal, free-market system that many traditionalists would vastly prefer, and the arguments for vouchers give heavy emphasis to social equity. Terry M. Moe, _Schools, Vouchers and the American Public_ (Brookings, 2001), pp. 3-4 [This book, written by political scientist Terry Moe of Stanford University, answers many questions that I had concerning the policitics of vouchers in the USA. For me, the most unexpected information was that two-thirds of registered voters in the US have never heard of vouchers, much less taken the time to think about them!] ____________________________________________________________ Thought du jour: simplicity has a price Who Moved My Cheese? by Spencer Johnson, MD, tells a story of mice in a maze. For the past three years it has been the best-selling business book. Ten million people have read it, the publisher claims, and so has my computer. I used the computer to analyse extracts to assess the reading age the material requires. The program considers vocabulary and sentence structure. Who Moved My Cheese? is less than 100 pages long, set in large print and copiously illustrated. The program judges it suitable for those who have completed five or six years of education. That is about the same as The Sun newspaper and rather lower than the requirements of the Harry Potter books. .... People who have little connection with business cannot be blamed if they react by dismissing its intellectual content. Books about business that are sympathetic, such as those of Johnson and Welch, are much less demanding of their readers than those that are hostile to capitalism. Whatever you think of their arguments, authors such as Naomi Klein and Noreena Hertz write well and for grown-ups. Some business writers, such as Peter Drucker, aim as high - but not many. The computer tells me that if you have managed to get to the end of this article, you almost certainly completed secondary education. Congratulations. John Kay, "Simplicity has a price", Financial Times, 7 May 2002. www.ft.com ____________________________________________________________ Thought du jour: Kofi Annon on globalisation I remain convinced that globalization can benefit humankind as a whole. But clearly at the moment millions of people -- perhaps even the majority of the human race -- are being denied those benefits. They are poor not because they have too much globalization, but too little or none at all. Kofi Annan, quoted in United Nations, World Public Sector Report 2001: Globalization and the State, p. 71. http://www.unpan.org/dpepa_worldpareport.asp ____________________________________________________________ Thought du jour: Mark Blaug on formalism in economics Question: [Y]ou make much of formal modeling and the evolution from the work of Kenneth Arrow and Gerard Debreu. Why do you believe that such formal mathematical modeling has taken such a firm hold? Why has the profession gone in that direction? Reply: ... [A] standard approach among people who have thought about this is that, sometime after World War II, economics began to model itself after hard science. It wanted to be the one social science that looked exactly like physics. This led to mathematization, mathematical modeling, formal modeling, and the resulting worship of technique and formal elegance. But the odd thing is this explanation does not really wash because if you know anything about physics--and I am an amateur physicist--physics is not at all like that. Physics takes evidence very seriously but many physical theories are rather muddled and confused and inconclusive. They are by no means very elegant. The subject we economists really have been aping is mathematics. We have turned economics into a kind of social mathematics that employs words such as "price," "market," "commodity." It looks like economics, but when you read an article that uses such words, all the relationships are mathematical relationships; all the inferences are mathematically drawn; and no thought is given to whether these mathematical variables, concepts, functional relationships bear any resemblance to real-world observation. Deirdre McCloskey, whose writings I do not otherwise like, has said quite rightly that economists look to the math department, not the physics department. That is absolutely true. Interview with Mark Blaug, Challenge Magazine, May-June 1998. http://www.btinternet.com/~pae_news/Blaug1.htm ____________________________________________________________ Thought du jour: true blue Americans I've done some statistical comparisons using one popular definition of the heartland: the "red states" that -- in an election that pitted both coasts against the middle -- voted for Mr. Bush. How do they compare with the "blue states" that voted for Al Gore? ... [W]hat's really outrageous is the claim that the heartland is self-reliant. That grotesque farm bill, by itself, should put an end to all such assertions; but it only adds to the immense subsidies the heartland already receives from the rest of the country. As a group, red states pay considerably less in taxes than the federal government spends within their borders; blue states pay considerably more. Over all, blue America subsidizes red America to the tune of $90 billion or so each year. And within the red states, it's the metropolitan areas that pay the taxes, while the rural regions get the subsidies. When you do the numbers for red states without major cities, you find that they look like Montana, which in 1999 received $1.75 in federal spending for every dollar it paid in federal taxes. The numbers for my home state of New Jersey were almost the opposite. Add in the hidden subsidies, like below- cost provision of water for irrigation, nearly free use of federal land for grazing and so on, and it becomes clear that in economic terms America's rural heartland is our version of southern Italy: a region whose inhabitants are largely supported by aid from their more productive compatriots. Paul Krugman, "True Blue Americans", NY Times, 7 May 2002 To the Editor (published 12 May 2002): Since I grew up in a "red" heartland state and now live in a "blue" coastline state, I feel qualified to respond to Paul Krugman's criticism of farm subsidies ("True Blue Americans, " column, May 7). Farmers, who go to work before the sun rises and work until well past sunset, seven days a week, 365 days a year, earn only pennies on each dollar they invest in their product. Without subsidies, most farms would need to cease production (or farmers would need to live like my childhood neighbors, who on cold Minnesota nights slept in the barn because they could not afford to heat both it and the house). If Mr. Krugman finds this an acceptable alternative, perhaps he could also solve this quandary: what exactly are we supposed to eat? MARA D. RUTTEN, Arlington, Va., May 7, 2002 [My answer to "What exactly are we supposed to eat?": Citizens of Singapore have no farmers to subsidise, yet they obtain a wide variety of food with no difficulty. --LW] ____________________________________________________________ Thought du jour: Mill, Marx, Hitler and UNESCO on the role of the state in education A general State education is a mere contrivance for moulding people to be exactly like one another: and as the mould in which it casts them is that which pleases the predominant power in the government, whether this be a monarch, a priesthood, an aristocracy, or the majority of the existing generation, in proportion as it is efficient and successful, it establishes a despotism over the mind, leading by natural tendency to one over the body. An education established and controlled by the State, should only exist, if it exist at all, as one among many competing experiments, carried on for the purpose of example and stimulus, to keep the others up to a certain standard of excellence. John Stuart Mill, On Liberty (1859), chapter V. 'Elementary education by the state' is altogether objectionable. Defining by a general law the expenditures on the elementary schools, the qualifications of the teaching staff, the branches of instruction, etc., and ... supervising the fulfillment of these legal specifications by state inspectors, is a very different thing from appointing the state as the educator of the people! Government and church should rather be equally excluded from any influence on the school. Karl Marx, 1875, Critique of the Gotha Program http://www.eserver.org/marx/1875-gotha.critique.txt By educating the young generation along the right lines, the People's State will have to see to it that a generation of mankind is formed which will be adequate to this supreme combat that will decide the destinies of the world. Adolf Hitler, Mein Kampf, trans. James Murphy, p. 357 (1939) . [UNESCO] is convinced that public and private education sectors each have something valuable to contribute, and that by combining their efforts and forging partnerships, they can boost the educational system's overall effectiveness-- under one condition: primary responsibility for teaching must remain in the hands of public authorities, because they alone are the guardians of the common interest. Jacques Hallak, "Guarding the common interest," UNESCO Courier, November 2000, p. 17. ____________________________________________________________ Thought du jour: Education (mis)management in India Words are inadequate to describe the state of primary education in northern Madhya Pradesh. One has to experience the total darkness of the mind to which entire generations have been condemned in order to appreciate the damage that has been done. .... The basic problem is a total lack of motivation amongst the teachers. In the rural primary schools, it is rare to find a teacher conscientiously teaching a class. Teachers complain about the lack of infrastructural resources, low salaries and the burden of non-teaching duties. But these are largely excuses, as teachers in private schools (who work more seriously, despite their lower salaries) have shown. Chandra Kant Shourie, "Education (mis)management in northern Madhya Pradesh", in _Public Report on Basic Education in India_ (Oxford University Press, New Delhi, 1999), p. 86. ____________________________________________________________ Thought du jour: W. Wilson on time required to write a speech I have heard that someone once asked Woodrow Wilson how long it took him to write a speech. He replied, "It depends. If I am to speak ten minutes, I need a week for preparation. If fiteen minutes, three days. If half and hour, two days. If an hour, I am ready now." Gilbert Gude, Foreward to _Respectfully Quoted_ (Library of Congress, Washington, DC, 1989), p. vii. ____________________________________________________________ Thought du jour: Seeing like a State (1) Anyone who has worked in a formal organization--even a small one strictly governed by detailed rules--knows that handbooks and written guidelines fail utterly in explaining how the institution goes successfully about its work. Accounting for its smooth operation are nearly endless and shifting sets of implicit understandings, tacit coordinations, and practical mutualities that could never be successfully captured in a written code. This ubiquitous social fact is useful to employees and labor unions. The premise behind what are tellingly called work-to-rule strikes is a case in point. When Parisian taxi drivers want to press a point on the municipal authorities about regulations or fees, they sometimes launch a work-to-rule strike. It consists merely in following meticulously all the regulations in the _Code routier_ and thereby bringing traffic throughout central Paris to a grinding halt. The drivers thus take tactical advantage of the fact that the circulation of traffic is possible _only_ because drivers have mastered a set of practices that have evolved outside, and often in contravention, of the formal rules. James C. Scott, Seeing like a State: how certain schemes to improve the human condition have failed (Yale University Press, 1998), pp. 255-256. ____________________________________________________________ Thought du jour: Seeing like a State (2) If the state's goals are minimal, it may not need to know much about the society. Just as a woodsman who takes only an occasional load of firewood from a large forest need have no detailed knowledge of that forest, so a state whose demands are confined to grabbing a few carts of grain and the odd conscript may not require a very accurate or detailed map of the society. If, however, the state is ambitious--if it wants to extract as much grain and manpower as it can, short of provoking a famine or a rebellion, if it wants to create a literate, skilled, and healthy population, if it wants everyone to speak the same language or worship the same god-- then it will have to become both far more knowledgeable and far more intrusive. James C. Scott, Seeing like a State: how certain schemes to improve the human condition have failed (Yale University Press, 1998), p. 184. ____________________________________________________________ Thought du jour: JS Mill on credentialism It would be giving too dangerous a power to governments, were they allowed to exclude any one from professions, even from the profession of teacher, for alleged deficiency of qualifications: and I think, with Wilhelm von Humboldt, that degrees, or other public certificates of scientific or professional acquirements, should be given to all who present themselves for examination, and stand the test; but that such certificates should confer no advantage over competitors, other than the weight which may be attached to their testimony by public opinion. John Stuart Mill (1806-1873), On Liberty (1859, chapter V, paragraph 14). ____________________________________________________________ Thought du jour: Adam Smith on investment in human capital When any expensive machine is erected, the extraordinary work to be performed by it before it is worn out, it must be expected, will replace the capital laid out upon it, with at least the ordinary profits. A man educated at the expence of much labour and time to any of those employments which require extraordinary dexterity and skill, may be compared to one of those expensive machines. The work which he learns to perform, it must be expected, over and above the usual wages of common labour, will replace to him the whole expence of his education, with at least the ordinary profits of an equally valuable capital. It must do this too in a reasonable time, regard being had to the very uncertain duration of human life, in the same manner as to the more certain duration of the machine. Wealth of Nations (1776), Book I, chapter 10. ____________________________________________________________ Thought du jour: the demand for basic education in India [P]opular demand for basic education in India is strong .... One symptom of this strong demand for basic education is the fact that, when the local school functions poorly, parents often send their children (especially boys) to study in other villages with better schools, or in private schools where fees have to be paid. While the blame for low attendance levels is often put on reluctant parents, the inadequacy of the schooling establishment may well be the more basic failure. Jean Dreze and Amartya Sen, India: Economic Development and Social Opportunity (Oxford University Press, 1995), pp. 128- 129. ____________________________________________________________ Thought du jour: JS Mill on women's rights The almost despotic power of husbands over wives needs not be enlarged upon here, because nothing more is needed for the complete removal of the evil, than that wives should have the same rights, and should receive the protection of law in the same manner, as all other persons. John Stuart Mill (1806-1873), On Liberty (1859, chapter V, paragraph 12). ____________________________________________________________ Thought du jour: Adam Smith describing the education of women in his day There are no public institutions for the education of women, and there is accordingly nothing useless, absurd, or fantastical in the common course of their education. They are taught what their parents or guardians judge it necessary or useful for them to learn, and they are taught nothing else. Every part of their education tends evidently to some useful purpose; either to improve the natural attractions of their person, or to form their mind to reserve, to modesty, to chastity, and to economy; to render them both likely to become the mistresses of a family, and to behave properly when they have become such. Wealth of Nations (1776), Book V, chapter 1. ____________________________________________________________ Thought du jour: Adam Smith on English public schools Adam Smith on the superiority of 'public' schools (which were and are privately run) over universities: In England the public schools are much less corrupted than the universities. In the schools the youth are taught, or at least may be taught, Greek and Latin; that is, everything which the masters pretend to teach, or which, it is expected, they should teach. In the universities the youth neither are taught, nor always can find any proper means of being taught, the sciences which it is the business of those incorporated bodies to teach. The reward of the schoolmaster in most cases depends principally, in some cases almost entirely, upon the fees or honoraries of his scholars. Schools have no exclusive privileges. In order to obtain the honours of graduation, it is not necessary that a person should bring a certificate of his having studied a certain number of years at a public school. If upon examination he appears to understand what is taught there, no questions are asked about the place where he learnt it. Wealth of Nations (1776), Book V, chapter 1. ____________________________________________________________ Thought du jour: neoliberal "Regarding your use of the term "neoliberal," this has no significant meaning in economic theory. In my experience, it refers to a non-economist's ideologically-based caricature of certain policy arguments made by economists. Pat Gunning responding to query from a non- economist, HES@eh.net, 17 April 2002. ____________________________________________________________ Thought du jour: JM Keynes on the desirability of preserving capitalism The authoritarian state systems of today seem to solve the problem of unemployment at the expense of efficiency and freedom. It is certain that the world will not much longer tolerate the unemployment which, apart from brief intervals of excitement, is associated -- and, in my opinion inevitably associated -- with present-day capitalist individualism. But it may be possible by a right analysis of the problem to cure the disease whilst preserving efficiency and freedom. J.M. Keynes, General Theory (1936), p. 381. ____________________________________________________________ Thought du jour: measurement of the tax burden [A]verage tax rates measured using aggregate data in a number of cases generate misleading indicators of the tax burden on taxpayers, on factors of production, and on consumption. Average tax rates for corporate income should be neglected, given the many statistical and conceptual difficulties raised by current estimation procedures. Policymakers should be fully aware of measurement problems and other limitations underlying such figures, should they be fielded to shape the public policy debate. OECD, "Tax Ratios: A Critical Survey", Tax Policy Studies No. 5 (November 2001), p. 11. Groups of citizens or particular activities are favoured when they are exempted from payment of taxes. These "tax expenditures" give the illusion that the State is smaller in terms of revenue or expenditure, and distort inter-country comparisons. UN/DESA/DPEPA, World Public Sector Report 2001: Globalization and the State, p. 140. http://www.unpan.org/dpepa_worldpareport.asp ____________________________________________________________ Thought du jour: grade inflation This academic year the country was shocked -- shocked! -- over the revelation that half of all undergraduate grades at Harvard are A or A-minus, and that 91 percent of last June's graduates walked off with Latin honors. ... [I]n 1998-99, several colleagues from Duke's Committee on Grades joined me in investigating [the influence of grades on course evaluation and course selection by Duke University students]. .... The difference between the most leniently graded department in the study (music, with a mean grade of 3.69) and the most stringently graded (math, with a mean of 2.91) was almost an entire letter grade. Moreover, departments that graded easiest, including literature, Spanish and cultural anthropology, tended to have the least able students as measured by SAT scores and college and high school G.P.A. .... Opponents of change, often high-grading faculty, continue to argue that the system isn't broken and doesn't need fixing. But grade inflation and, perhaps more important, differences in grading philosophies, distort student and faculty assessments. Students tend to select courses with teachers who grade leniently, often learning less along the way. Uneven grading practices allow students to manipulate their grade point averages and honors status by selecting certain courses, and discouraging them from taking courses that would benefit them. By rewarding mediocrity, excellence is discouraged. Valen E. Johnson, "Grade inflation's debilitating effect," New York Times, 14 April 2002, Section 4A, p. 14. Johnson, who is Professor of Statistics and Decision Sciences at Duke University, is author of a forthcoming book, College Grading: A National Crisis in Undergraduate Education. ____________________________________________________________ Thought du jour: Samuel Brittan My own preference is for direct aid to people or small communities who are hungry or impoverished or who can, with a little help, be supplied with clean water and remedies against disease. The problem is that there are so many hundreds of non-governmental agencies, all appealing to our consciences, that we do not know which of them will send help where it is most needed and which will waste the highest proportion on their own administration or on various kinds of anti-capitalist propaganda. If only some publisher would be brave enough to provide a good charities guide. .... Unfashionably, I prefer Margaret Thatcher's view that it is wrong to prevent regions from breaking away from an unwanted union. I hope that she would apply this to Scotland. Samuel Brittan, "Liberal imperialism is a dangerous temptation", Financial Times, 11 April 2002. www.ft.com ____________________________________________________________ Thought du jour:J S Mill and Karl Marx on education The objections which are urged with reason against State education, do not apply to the enforcement of education by the State, but to the State's taking upon itself to direct that education: which is a totally different thing. That the whole or any large part of the education of the people should be in State hands, I go as far as any one in deprecating. All that has been said of the importance of individuality of character, and diversity in opinions and modes of conduct, involves, as of the same unspeakable importance, diversity of education. John Stuart Mill, 1859, On Liberty (chapter V, paragraph 13) http://www.bartleby.com/130/5.html 'Elementary education by the state' is altogether objectionable. Defining by a general law the expenditures on the elementary schools, the qualifications of the teaching staff, the branches of instruction, etc., and ... supervising the fulfillment of these legal specifications by state inspectors, is a very different thing from appointing the state as the educator of the people! Government and church should rather be equally excluded from any influence on the school. Karl Marx, 1875, Critique of the Gotha Program http://www.eserver.org/marx/1875-gotha.critique.txt ____________________________________________________________ Thought du jour [T]hose writers who are most assertive about the novelty of their work and the failings of their predecessors are frequently the least original. Mancur Olson, The Rise and Decline of Nations (Yale University Press, 1982), p. 181. ____________________________________________________________ Thought du jour In media coverage of anti-globalization protests, "globalization" often becomes a catch-all term for capitalism and injustice. (Indeed, for some protestors, referring to capitalism _and_ injustice would be redundant.) Timothy Taylor, "The Truth about Globalization", Journal of Economic Perspectives, Spring 2002. ____________________________________________________________ Thought du jour "How is one to explain a society that is happy with private possession of tens of millions of guns and yet is obsessed with removing every threat to health or safety? Possession of cannabis is a crime; but weapons whose sole purpose is to maim human beings are freely available. Martin Wolf, "Gender and America's agenda", Financial Times, 3 April 2002. When we compare the strange respect of mankind for liberty, with their strange want of respect for it, we might imagine that a man had an indispensable right to do harm to others, and no right at all to please himself without giving pain to any one. John Stuart Mill (1806-1873), On Liberty (1859, chapter V, paragraph 15). _____________________________________ Thought du jour A general State education is a mere contrivance for moulding people to be exactly like one another: and as the mould in which it casts them is that which pleases the predominant power in the government, whether this be a monarch, a priesthood, an aristocracy, or the majority of the existing generation, in proportion as it is efficient and successful, it establishes a despotism over the mind, leading by natural tendency to one over the body. An education established and controlled by the State, should only exist, if it exist at all, as one among many competing experiments, carried on for the purpose of example and stimulus, to keep the others up to a certain standard of excellence. John Stuart Mill, On Liberty (1859), chapter V. [UNESCO] is convinced that public and private education sectors each have something valuable to contribute, and that by combining their efforts and forging partnerships, they can boost the educational system's overall effectiveness-- under one condition: primary responsibility for teaching must remain in the hands of public authorities, because they alone are the guardians of the common interest. Jacques Hallak, "Guarding the common interest," UNESCO Courier, November 2000, p. 17. [Mr Hallak is UNESCO Assistant Director-General for Education.] ____________________________________________________________ Thought du jour If one looks at the amount of public money spent per capita on those who go to college and the amount of public money spent per capita on those who do not go to college, one sees the gross inequities favoring the elites that Lindblom rightly deplores. Everyone does not need to go to college but everyone does need a good post-secondary system of skill training. Whatever public funds are spent on those who go to college, those who do not go to college should get equal treatment. Lester C. Thurow, review of C.E. Lindblom, The Market System (Yale University Press), 2001), in the Journal of Economic Literature 40:1 (March 2002), pp. 214-215. ____________________________________________________________ Thought du jour The reader will ... be disappointed with this book, ... [which] is plagued with methodological problems and subjective, unsubstantiated comments. There is even a pitch in favor of ECLAC's discredited import substitution policies. Jose Antonio Gonzalez-Anaya, review of Barbara Stallings and Wilson Peres, Growth Employment and Equity: The Impact of the Economic Reforms in Latin America and the Caribbean (Brookings Institution, 2000), in the Journal of Economic Literature 40:1 (March 2002), pp. 205-207. ____________________________________________________________ Thought du jour In line with common practice, we have used "education" and "schooling" as synonymous. But the identification of the two terms is another case of using persuasive terminology. In a more careful use of the terms, not all "schooling" is "education," and not all "education" is schooling. Many highly schooled people are uneducated, and many highly "educated" people are unschooled. Alexander Hamilton was one of the most truly "educated", literate, and scholarly of our founding fathers, yet he had only three or four years of formal schooling. Examples could be multiplied manyfold, and no doubt every reader knows highly schooled people whom he regards as uneducated and unschooled people whom he considers learned. Milton Friedman and Rose D. Friedman, Free to Choose (New York, 1980), first two paragraphs of the conclusion to chapter 6 "What's wrong with our schools?" ____________________________________________________________ Thought du jour Supporters of choice are quick to praise competition. Make schools compete with each other and the schools from which all families can choose will be better. But where else has competition worked in our inner-city neighborhoods? Has it worked in housing? In grocery stores? In health care? In retail clothing? .... [Y]ou probably cannot buy a new car and maybe not even a used one in most inner cities. You probably cannot buy a bicycle or even get a hinge for a door. You cannot se a non-X-rated movie. You can buy liquor, but the prices will be high. Why does the market fail to provide these things? Does the government have a monopoly on the movies? On car sales? On grocery stores? Why then do so many business and political proponents of educational choice have such blind faith in competition as the salvation of education in our cities? John F. Witte, The Market Approach to Education (Princeton University Press, 2000), p. 5. [Witte correctly cautions that we should not expect miracles from an end of government monopoly of the provision of free schooling in US inner-cities. But it does not follow that education vouchers will fail because markets perform poorly in providing for other needs of these consumers. Housing, cars, bicycles and movies are not provided free to residents of inner-cities. If residents were given vouchers for the purchase of housing, cars, bicycles or non-X-rated movies, private entrepreneurs would no doubt supply them. Similarly, we can expect a market response when parents are given vouchers to spend on private schooling of their choice. The government in the US does provide many low-income families with food vouchers (known as food stamps); nonetheless, Witte includes grocery stores in his long list of market failures. But, is this an instance of market failure, or do high prices merely reflect the high costs of doing business in urban ghettoes? A case can be made that food _is_ distributed in inner cities in a reasonably efficient manner, given the constraint that customers do not own motor vehicles, so must shop in nearby stores. Food prices are high and variety is low compared to stores in the more affluent suburbs, but might well be a consequence of the smaller size of shops and, most importantly, a higher incidence of shoplifting and other crime. I have seen no evidence that high food prices and unattractive shops produce excess profits for monopoly suppliers. If the retail food business were that attractive, large supermarket chains would be rushing to open stores in urban ghettoes. This, most definitely, is not the case. -- LW] ____________________________________________________________ Thought du jour John Stuart Mill on government monopoly of education: One thing must be strenuously insisted on; that the government must claim no monopoly for its education, either in the lower or in the higher branches; must exert neither authority nor influence to induce the people to resort to its teachers in preference to others, and must confer no peculiar advantages on those who have been instructed by them. Though the government teachers will probably be superior to the average of private instructors, they will not embody all the knowledge and sagacity to be found in all instructors taken together, and it is desirable to leave open as many roads as possible to the desired end. It is not endurable that a government should, either de jure or de facto, have a complete control over the education of the people. To possess such a control, and actually exert it, is to be despotic. A government which can mould the opinions and sentiments of the people from their youth upwards, can do with them whatever it pleases. Though a government, therefore, may, and in many cases ought to, establish schools and colleges, it must neither compel nor bribe any person to come to them; nor ought the power of individuals to set up rival establishments, to depend in any degree upon its authorization. It would be justified in requiring from all the people that they shall possess instruction in certain things, but not in prescribing to them how or from whom they shall obtain it. Principles of Political Economy (1871), BookV,Chapter XI in paragraph V.11.27. ____________________________________________________________ Thought du jour When the state of Kerala [India] was established in 1956, the Communist Party was the only political organization in the state with a programme for socio-economic and political change. .... The present situation of a low to no-growth economy is neither desirable nor politically viable .... It is now clear that the tasks of increasing employment and production (and transforming production conditions) have to be principal components of the next phase of Kerala's development. This transformation, however, must build on, consolidate and extend the achievements of the past, and not undermine (or liquidate) the gains of a long history of public action in order to impose a capitalist-market-driven, income-growth- alone strategy of development on the people..... Kerala has extraordinary natural resources, a basic land reform, an educated, skilled and politically conscious work-force, and unique achievements in the spheres of health and education. It has a strong left political movement that is sensitive to issues of development and growth .... [Kerala, despite impressive levels of literacy and life expectancy, has a per capita income well below that of neighbouring states and the average for India. -- LW] V.K. Ramachandran, "On Kerala's Development Achievements", in J. Dreze and A. Sen (editors), Indian Development: Selected Regional Perspectives (UNU/WIDER and Oxford University Press, 1997), pp. 327, 327-28. The contrast between (1) the advantages of Kerala's radical social preparedness, and (2) the handicaps of its essentially conservative economic policies (often clinging forcefully to old-fashioned bureaucratic regulations) has tended to produce an odd mismatch. As a result, the people of Kerala have been much more inclined to make use of economic opportunities outside the state than at home. While Kerala's domestic economy has continued to stagnate over the decades, its 'outside incomes' (including remittances) have been very large over that same period, reflecting extensive use by the people of Kerala of economic opportunities elsewhere, often in other countries. Jean Dreze and Amartya Sen, India: Economic Development and Social Opportunity (Oxford University Press, 1995), p. 198. ____________________________________________________________ Thought du jour The Microsoft case divides the American public .... For one camp, the company is the standard-bearer of American business, which has made its shareholders and employees rich by delivering exciting new products to a mass market. For another, Microsoft is a ruthless monopolist, determined to destroy its competitors and any innovation but its own. But the real debate is not, ultimately, about the details of operating systems and the practicality of middleware, or about how the computer industry should evolve. These issues are important but they are issues to which nobody knows the answers. Not Bill Gates or Jim Clark; not George Bush or the Supreme Court; not the many economists and computer geeks who have provided paid and unpaid testimony on each side. The real debate is about the nature of a market economy. It is between those who believe that the success of capitalism is owed to the pluralism of markets and those who believe that it is owed to the wisdom of business people. Did markets beat planning because Bill Gates was smarter than the deadbeat who chaired the Politburo's committee on the future of the Soviet computer industry? Or did markets beat planning because no one - not even Bill himself - has the capacity, or should ever have the authority, to determine the future of an industry? John Kay, "Two sides of capitalism", Financial Times, 12 March 2002. www.ft.com ____________________________________________________________ Thought du jour What then of ... the [Tobin] tax as a means of financing development? This link is in no way natural, since the money would come mainly from transactions among the advanced countries. In April 2001, 50 per cent of all trading was dollar/euro or dollar/yen. Another 30 per cent were trades between these three and sterling, the Swiss franc and the Canadian and Australian dollars. The idea that the link will work politically because the tax is, in some way, painless is also absurd. Why should this particular "stealth tax" persuade rich countries to transfer vastly more revenue for development than they now choose to do? If they did agree on a tax on transactions, it is overwhelmingly likely that they would use the revenue for their own high priority purposes. Development might be a part. It is unlikely to be more than a small one. Martin Wolf, "Misplaced hopes in Tobin's tax", Financial Times, 20 March 2002. www.ft.com ____________________________________________________________ Thought du jour Alan Blinder said once that every economist who serves in any administration needs a special mindset--needs to wake up in the morning saying to him or herself, "O goody! Today I may be able, in doing my job, to do something that will get me fired! Then I'll be able to go home!" What he didn't say was that every economist who approaches his job with this mindset is vastly more powerful and likely to have a positive impact than an economist desperate to hang onto his or her executive-branch office space. J. Bradford DeLong, Daily Journal, 2001-03-19. http://econ161.berkeley.edu/TotW/Daily_Journal.html ____________________________________________________________ Thought du jour The World Bank's latest figures combining the new poverty focus and the newly selective aid is that "$1 billion in extra aid lifts more than 250,000 people above the $1-a-day line". Spending $4000 per person to get someone with annual income less that $365 over $365 does not seem like the world's biggest bargain. William Easterly, "The cartel of good intentions: bureaucracy versus markets in foreign aid", March 2002, p. 29. www.cgdev.org ____________________________________________________________ Thought du jour It has often been wondered why Marx failed to take into account technical progress, which would have made it possible to pay the worker more while maintaining the ratio of profits to wages. The answer is that there is no technical progress in his system, merely the application of increasing quantities of machines to production. One of the extraordinary ironies of history is that this was precisely the method used by the Soviet authorities to promote the economic development of their societies. The Marxist prophecy of stagnating living standards came true only under Communism. Robert Skidelsky, The Road from Serfdom: The Economic and Political Consequences of the End of Communism (Viking Penguin, New York, 1996), p. 35. ____________________________________________________________ Thought du jour The Soviet command economy was in fact what Marx imagined capitalism to be -- an institutionalized system for centralizing wealth and power. .... The gap which the Soviet economy developed between its productive power and its ability to satisfy human wants was exactly the one Marx predicted for capitalist economies. Robert Skidelsky, The Road from Serfdom: The Economic and Political Consequences of the End of Communism (Viking Penguin, New York, 1996), p. 103. ____________________________________________________________ Thought du jour No one knows how to make societies grow faster. The only safe rule is to create an environment in which enterprise can flourish. Robert Skidelsky, The Road from Serfdom: The Economic and Political Consequences of the End of Communism (Viking Penguin, New York, 1996), p. 91. ____________________________________________________________ Thought du jour Economists are a more cheerful breed than historians, political philosophers, sociologists -- and priests. This is probably because they suffer from almost total historical amnesia -- if indeed they ever learnt history in the first place. Robert Skidelsky, The Road from Serfdom: The Economic and Political Consequences of the End of Communism (Viking Penguin, New York, 1996), p. 163. [Note: Skidelsky, the biographer of Keynes, is not an economist. He is an historian.] ____________________________________________________________ Thought du jour There are all too few competent critical studies of the economics of the host of United Nations organizations, despite the fact that most of them are debasing economics. Whereas the early economic doctrines of the Church were supported, as Viner has shown, by considerable scholarship, the economic doctrines that prevail within the United Nations are not similarly burdened. T.W. Schultz, Investing in People (U of California Press, Berkeley, 1981), p. 118. ____________________________________________________________ Thought du jour If foreign or multinational firms are welcome to enter a country to produce and compete on an equal basis with local firms, they will not only often bring new ideas with them but also make the local market more competitive and perhaps destroy a cartel as well. That is one reason why they are usually so unpopular--the consumers who freely choose to buy their goods and the workers who choose to accept the new jobs they offer do not lose from the entry of the multinationals, but these consumers and workers may be persuaded that this foreign entry is undesirable by the propaganda of those who do. Mancur Olson, The Rise and Decline of Nations (Yale University Press, 1982), p. 142. ____________________________________________________________ Thought du jour Many multinational firms and new firms operating in the societies in transition refuse to hire locals who have experience in their industry! I once read an account in the Washington Post of an Austrian hotel chain operating in the former Soviet Union that refused to hire local workers who had experience in the Soviet hotel industry. Thinking that this story was, while probably unique, most instructive, I passed it on to others, only to hear of comparable policies in other Western hotel chains in the former Soviet Union. Then I quickly came upon reports of women's clothing stores who refuse to hire anyone who has worked in the Polish state fashion industry, and an entrepreneur who created a successful Russian private airline and refuses to hire anyone who has worked for Aeroflot for his cabin crews. Mancur Olson, Power and Prosperity: Outgrowing Communist and Capitalist Dictatorships (Basic Books, New York, 2000), p. 163. [In recruiting consultants for a proyect on restructuring of Central American industries, many years ago, I refused to consider anyone who had previous experience with an international organisation. The results were excellent. -- LW] ____________________________________________________________ Thought du jour I have seen a small manufactury" -- [Adam] Smith was one of the first (and last) economists to do field research -- "where ten men ... could make among them upwards of forty- eight thousand pins in a day." William Watson, "Free trade worked", National Post, February 23, 2002. http://www.nationalpost.com ____________________________________________________________ Thought du jour [T]o the liberal neither moral nor religious ideals are proper objects of coercion, while both conservatives and socialists recognize no such limits. ... This may ... explain why it seems so much easier for the repentant socialist to find a new spiritual home in the conservative fold than in the liberal. .... [T]he liberal is fundamentally a skeptic -- but it seems to require a certain degree of diffidence to let others seek their happiness in their own fashion and to adhere consistently to that tolerance which is an essential characteristic of liberalism. .... In the United States, where it has become almost impossible to use "liberal" in the sense in which I have used it, the term "libertarian" has been used instead. It may be the answer; but for my part I find it singularly unattractive. F. A. Hayek, "Why I am not a conservative", in _The Constitution of Liberty_ (Chicago, 1960). www.hem.passagen.se/nicb/cons.htm [Note: In the USA, socialists came to label themselves as 'liberals', perhaps because socialism was a bad word in that country. This creates much confusion and misunderstanding, for socialism and liberalism have little in common. --LW] ____________________________________________________________ Thought du jour [S]eparate discriminatory services for the poor have always tended to be poor quality services. Richard Titmuss, _A Commitment to Welfare_ ( Allen & Unwin, London, 1968). ____________________________________________________________ Thought du "fin de la semaine" Policymakers who want to promote growth would not go far wrong ignoring most of the vast literature reporting growth regressions. Basic theory, shrewd observation, and common sense are surely more reliable guides for policy. N. Gregory Mankiw, "The Growth of Nations", Brookings Papers on Economic Activity 1 (1995), pp. 307-308. ____________________________________________________________ Thought du jour It has often been wondered why Marx failed to take into account technical progress, which would have made it possible to pay the worker more while maintaining the ratio of profits to wages. The answer is that there is no technical progress in his system, merely the application of increasing quantities of machines to production. One of the extraordinary ironies of history is that this was precisely the method used by the Soviet authorities to promote the economic development of their societies. The Marxist prophecy of stagnating living standards came true only under Communism. Robert Skidelsky, The Road from Serfdom: The Economic and Political Consequences of the End of Communism (Viking Penguin, New York, 1996), p. 35. ____________________________________________________________ Thought du jour Keynes lauded, in almost Hayekian vein, individualistic capitalism as embodying 'the most secure and successful choices of future generations' and being 'the most powerful instrument to better the future'. The question of how this liberal thinker came to be appropriated by the collectivists is something which we will need to address. Robert Skidelsky, The Road from Serfdom: The Economic and Political Consequences of the End of Communism (Viking Penguin, New York, 1996), p. 72. [Skidelsky is author of the three volume biography _John Maynard Keynes_.] ____________________________________________________________ Thought du jour [T]he signaling model can be thought of as the "Harvard MBA" metaphor of education in which nothing is really learned but wages are higher because a highly ambitious group is pre- selected for employers, versus the "Harvard Law" metaphor in which wages are higher because stuff is really learned, but of dubious social product. Lant Pritchett, "Where has all the education gone?" World Bank Policy Research Working Paper 1581 (March 1996), footnote 50, pp. 37-38. ____________________________________________________________ Thought du jour [W]hat needs to be explained about formal schooling is not so much why governments subsidize it as they do, but why they insist on owning so much of it in every country in the world. Mark Blaug, "The empirical status of human capital theory: a slightly jaundiced survey," Journal of Economic Literature, September 1976, p. 831 (footnote 8). ____________________________________________________________ Thought du jour The state is said to participate in the economy as a consumer as well as a producer. The famous accounting identity of elementary macroeconomics is: GDP = C + I + G + (X-M). In words, gross domestic product is the sum of private consumption plus gross investment plus government consumption plus net exports. .... There is no term in the accounting identity for corporate or business consumption. The SNA [system of national accounts] assumes that all private consumption of final goods and services is by households. Corporations consume only intermediate goods, inputs into the production process. Workers, managers and stockholders consume final goods and services, but corporations do not. Why, then, is there a term for government consumption? Is it not true that all government output intended for final consumption is distributed to the public either free of charge or for a nominal fee? United Nations, _World Public Sector Report 2001: Globalization and the State_ (December 2001), part II, p. 142. http://www.unpan.org/dpepa_worldpareport.asp ____________________________________________________________ Thought du jour On his return [to Cambridge] he informed his parents that he would abandon the Economics Tripos and concentrate on the civil service examination. Marshall regreted his decision. .... But Maynard was adamant. He never did take an economics degree. In fact, his total professional training came to little more than eight weeks. All the rest was learnt on the job. Robert Skidelsky, John Maynard Keynes, Volume One: Hopes Betrayed, 1883-1920 (Viking Penguin, New York, 1986 [1983]), p. 166. ____________________________________________________________ Thought du jour Rule 17. Omit needless words. Vigorous writing is concise. A sentence should contain no unnecessary words, a paragraph no unnecessary sentences, for the same reason that a drawing should have no unnecessary lines and a machine no unnecessary parts. This requires not that the writer make all sentences short, or avoid all detail and treat subjects only in outline, but that every word tell. William Strunk, Jr. and E.B. White, The Elements of Style (4th edition, Longman, New York, 2000), p. 23. [The 1st edition appeared in 1959.] ____________________________________________________________ Thought du jour Domingo Cavallo - whom I have known since we were both graduate students, who is a good man of great accomplishments - has lost sight of the fact that the currency board was a means to an end, not an end in itself. And it's really sad to see him blaming foreign economists for his problems, when in fact Mussa and Haussman have shown great courage in their recent pronouncements. Paul Krugman, "Argentina's money momomania," undated. http://www.wws.princeton.edu/~pkrugman/mania.html ____________________________________________________________ Thought du jour Those countries (or parts thereof) that are unable to repeat the [technological] revolution of the contemporary world, and at the same time find a niche in the international market, will end up in the "worst of all possible worlds." They will not even be considered worth the trouble of exploitation; they will become inconsequential, of no interest to the developing globlalized economy. Fernando Henrique Cardoso, Charting a New Course: The Politics of Globalization and Social Transformation (Rowman and Littlefield, Oxford, UK, 2001), p. 276. ____________________________________________________________ Thought du jour The Inter-American Development Bank ... is housed in one of the most expensively built per-square-foot buildings in Washington DC. That befits the IDB, an almost entirely useless institution, whose highly paid Latino and local functionaries are mostly devoted to late arrivals, early departures and long lunches. .... The IDB exemplifies both the gringo inability to convert good intentions into good results when it comes to Latin America, and the persistent Latino inability to make public institutions work for anyone but their parasitic possessors. Throughout Latin America there are useless institutions just like the IDB, which consume vast resources to produce little or nothing. Bolivia is landlocked, all its coastline lost to Chile's armed robbery a century ago, but it still keeps a navy complete with resplendent admirals, over-staffed headquarters and brass bands. At least Bolivia is spared the costs of the aircraft carriers, cruisers, destroyers and submarines of other Latin American navies, all of them no more useful for any practical purpose than Bolivia's naval band. Edward N. Luttwak, "Flagging fortunes", The Times Literary Supplement, No. 5155 (18 January 2002), p. 12. ____________________________________________________________ Thought du jour Much of what we call consumption constitutes investment in human capital. Direct expenditures on education, health, and internal migration to take advantage of better job opportunities are clear examples. Earnings foregone by mature students attending school and by workers acquiring on-the-job training are equally clear examples. Yet nowhere do these enter into our national accounts. The use of leisure time to improve skills and knowledge is widespread and it, too, is unrecorded. In these and similar ways, the _quality_ of human effort can be greatly improved and its productivity enhanced. I shall contend that such investment in human capital accounts for most of the impressive rise in the real earnings per worker. T.W. Schultz, "Investment in Human Capital", AEA presidential address, 28 December 1960. ____________________________________________________________ Thought du jour "You're a lost civilization!" crowed the anthropologist to the Indian chief. "We don't mind being lost," answered the chief. "It's being found that scares us." Anonymous. Quoted in David S. Landes, The Wealth and Poverty of Nations (Norton, New York, 1998), p. 60. ____________________________________________________________ Thought du jour I've had strong opinions probably since I was born. It makes you unpopular, but what can you do? James D. Watson, co-discoverer of DNA's structure, in response to the question "Have you always held such strong views?" "Questions for James D. Watson," New YorkTimes Magazine, 3 February 2002, p. 9. ____________________________________________________________ Thought du "fin de la semaine" Despite the harsh experience of the dictatorship, only 45% of Chileans considered democracy the best political system in a survey last year, well below Uruguayans (79%), Costa Ricans (71%) and Argentines (58%). "CHILE: Chilean model appeals to Argentina" Oxford Analytica Daily Brief, 01 February 2002. ____________________________________________________________ Thought du jour Consistent with these [liberal and human] values, our government does not build walls to keep educated people from leaving the United States; but, inconsistently, we erect fences to keep people out .... T.W. Schultz, Investing in People (U of California Press, Berkeley, 1981), p.90. ____________________________________________________________ Thought du jour Labour mobility ought to be part of a free and integrated world economy. It would also be a powerful influence for narrowing income differentials worldwide. If workers from North Africa could migrate to European Mediterranean countries this would not only increase the living standards for those who move. It would also help those who stay at home by making labour scarcer than it otherwise would have been. Samuel Brittan, "Notes on globalisation: Evidence to House of Lords Committee 15/01/02". http://www.samuelbrittan.co.uk/text102_p.html ____________________________________________________________ Thought du jour What many economists fail to understand is that poor people are no less concerned about improving their lot and that of their children than rich people are. T.W. Schultz, Investing in People (U of California Press, Berkeley, 1981), p. 3. ____________________________________________________________ Thought du jour [A]t least for the East Asian countries who began their process of opening up in the late 1950s and 1960s, the opportunity to export enabled them to grow much more rapidly than they could have had they had to rely on the domestic market, as 19th century growth did. .... One statistic illustrates this: South Korea's per capita income growth in percentage terms over any single decade between 1960 and 1995 was greater than British per capita income growth over the entire 19th century! Anne Krueger, Roundtable comments at NBER Conference on Globalization in Historical Perspective, 4-5 May 2001. http://www.nber.org/books/global/ ____________________________________________________________ Thought du jour Much of the increased life expectancy ... has come from gains in prevention, cleaner living rather than better medicine. .... Who lives in unwashed woolens --and woolens do not wash well-- will itch and scratch. So hands were dirty, and the great mistake was failure to wash before eating. This is why those religious groups that prescribed washing --the Jews, the Muslims-- had lower disease and death rates; which did not always count to their advantage. People were easily persuaded that if fewer Jews died, it was because they had poisoned Christian wells. David S. Landes, The Wealth and Poverty of Nations (Norton, New York, 1998), p. xviii. ____________________________________________________________ Thought du jour Has the development of Information Technology added a new element [to globalisation] - because any change in any part of the world can be viewed instantly on computer screens? Surely the bigger breakthroughs were made in the middle of the 19th century when we leapt from horse drawn transport and sailing ships to the railways and transatlantic cable, which transmitted to the New York stock exchange news of the 1873 Vienna financial crash?. Samuel Brittan, "Notes on globalisation: Evidence to House of Lords Committee 15/01/02". http://www.samuelbrittan.co.uk/text102_p.html ____________________________________________________________ Thought du jour I have spent a good many years thinking and writing about educational problems in the Third World. .... Early on I collaborated ... on a large-scale study of _The Causes of Graduate Unemployment in India_ (1969) and this experience left me with a conviction that subsequent experience merely confirmed: the overexpansion of higher education is one of the scourges of the Third World. .... [This] overexpansion of higher education ... is associated with underinvestment in primary education and the vital importance of primary education in the development process is perhaps the principal point of agreement among virtually all economists who have ever studied the problems of education in the Third World. Mark Blaug, The Economics of Education and the Education of an Economist (NYU Press,New York, 1987), p. ix. ____________________________________________________________ Thought du jour "[G]iven Europe's limited experience with industrialization in the nineteenth century and the shortcomings of the economic science of the time, no superior authority could have effected an industrial revolution so rapidly and efficiently as the impersonal market. Under the best of circumstances, the governments of the day were ignorant; in addition, they were usually perverse in their judgments and inconsistent in their actions. ... It is no coincidence that the area of most rapid industrial growth in the eighteenth and nineteenth centuries were those free of supervision and constraints-- the textile centres of the Rhineland, for example, rather that the hothouse factories of Frederick II. David S. Landes, The Unbound Prometheus: Technological Change and Industrial Development in Western Europe from 1750 to the Present (Cambridge University Press, 1969), pp. 548-549. ____________________________________________________________ Thought du jour This task [of persuading private investors to support a country] is made more difficult by the way in which IMF is used for political purposes, especially by the USA. It has been too free in awarding its good housekeeping badge to countries which the USA wished to support - above all Russia in the late 1990s, but possibly also Argentine in 2001. Samuel Brittan, "Notes on globalisation: Evidence to House of Lords Committee 15/01/02". http://www.samuelbrittan.co.uk/text102_p.html ____________________________________________________________ Thought du jour Do we try to nudge Afghanistan in the direction of democracy and civil liberties? To what end? India is a democracy with civil liberties, and it is mired in poverty. But Hong Kong, with no history of democratic institutions, is one of the wealthiest places on earth. .... If you want to lift people out of starvation, political freedom is a luxury. Economic freedom is a necessity. Steven E. Landsburg, "Afghanistan After the War:Don't give them democracy. Give them capitalism" www.slate.com, 6 November 2001. ____________________________________________________________ Thought du jour [A]bout 2bn people live in countries that are neither globalising nor developing: the aggregate growth of these countries was negative in the 1990s. In effect, they are being progressively marginalised within the world economy. Yet the proposition that the globalisation of the past two decades has caused increased poverty and global inequality is false. The numbers of desperately poor people and of inequality among all the world's households have both fallen for the first time in some 160 years. The explanation has been accelerated economic growth in a group of successfully globalising countries with very large aggregate populations. Martin Wolf, "A stepping stone from poverty", Financial Times, 18 December 2001. ____________________________________________________________ Thought du jour [I]nternational financial institutions like the World Bank and the International Monetary Fund paid virtually no attention to corruption for decades. Only recently has corruption become a hot issue for these institutions. Even then we are often reluctant to utter the word _corruption_; _problems with governance_ is the bureaucratic jargon we use instead. William Easterly, The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics (MIT Press, 2001), p. 241. ____________________________________________________________ Thought du jour: Cardoso and Smith In the 1960s, we still strongly believed in the ability of the state to shape progress. .... Today, this view has radically altered. In the 1980s, the positive identification between the state and development has weakened, and the state is almost seen as an obstacle to progress. It is not only that neoliberal ideology is temporarily dominant. More than this, both in rich and in poor countries, it is the objective failure of the state that has led to reform efforts .... The state is the fundamental actor, but its role changes. Because it has more limited means, its course of action must be carefully chosen. This represents another paradox: precisely because it must reduce its role, the state becomes a more relevant actor in society. Fernando Henrique Cardoso, Charting a New Course: The Politics of Globalization and Social Transformation (Rowman and Littlefield, Oxford, UK, 2001), p. 91. What is the species of domestic industry which his capital can employ, and of which the produce is likely to be of the greatest value, every individual, it is evident, can, in his local situation, judge much better than any statesman or lawgiver can do for him. The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. Adam Smith, Wealth of Nations (1776), Book 4, Chapter II. ____________________________________________________________ Thought du jour Specialists who never look beyond their own domain are apt to see things out of true proportion; much of the knowledge they get together is of comparatively little use; they work away at the details of old problems which have lost most of their significance and have been supplanted by new questions rising out of new points of view; and they fail to gain that large illumination which the progress of every science throws by comparison and analogy on those around it. Comte did good service therefore by insisting that the solidarity of social phenomena must render the work of exclusive specialists even more futile in social than in physical science. [JS] Mill conceding this continues:-- "A person is not likely to be a good economist who is nothing else." Alfred Marshall, Principles of Economics (8th edition, 1920), App.C, "The Scope and Method of Economics". ____________________________________________________________ Thought du jour The study of economics does not seem to require any specialised gifts of an unusually high order. Is it not, intellectually regarded, a very easy subject compared with the higher branches of philosophy and pure science? Yet good, or even competent, economists are the rarest of birds. An easy subject at which very few excel! The paradox finds its explanation perhaps, in that the master-economist must possess a rare combination of gifts. He must be mathematician, historian statesman, philosopher- in some degree. He must understand symbols and speak in words. He must contemplate the particular in terms of the general, and touch abstract and concrete in the same flight of thought. He must study the present in the light of the past purposes of the future. No part of man's nature or his institutions must lie entirely outside his regard. He must be purposeful and disinterested in a simultaneous mood; as aloof and incorruptible as an artist, yet sometimes as near the earth as a politician. J. M. Keynes "Alfred Marshall, 1842-1924" The Economic Journal, Vol. 34, No. 135. (Sep., 1924), pp. 321-322. ____________________________________________________________ Thought du jour "[W]e economists have too often peddled formulas that violated the basic principle of economics. The problem was not the failure of economics, but the failure to apply the principles of economics in practical policy work. What is the basic principle of economics? As a wise elder once told me, "People do what they get paid to do; what they don't get paid to do, they don't do." A wonderful book by Steven Landsburg, The Armchair Economist, distils the principle more concisely: "People respond to incentives; all the rest is commentary." William Easterly, The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics (MIT Press, 2001), p. xii. ____________________________________________________________ Thought du jour [T]he poorest countries, with the lowest skills, produce relatively more raw materials; the richest countries, with the highest skills, produce relatively more manufactured goods. Economists used to think that producing agriculture versus manufactures just reflected comparative advantage-- that is, who had the better agricultural land, who had the better sites for manufacturing, and so forth. The skill acquisition story fits reality much better. The United States, whose agricultural advantages are legendary, devotes 2 percent of its economy to agriculture. Ethiopia, whose frequent droughts, mountainous land, and cattle-killing tsetse fly make it about as ideal for agriculture as the lunar surface, devotes 57 percent of its economy to agriculture. William Easterly, The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics (MIT Press, 2001), p. 161. ____________________________________________________________ Thought du jour All the sufferings endured by the English and European working classes during their decades of incipient industrialisation bulk little alongside the hardships, insecurity, and death imposed on the proletariats and peasantries of Soviet Russia and Communist China in the name of 'singing tomorrows'. David S. Landes, The Unbound Prometheus: Technological Change and Industrial Development in Western Europe from 1750 to the Present (Cambridge University Press, 1969), pp. 548-549. ____________________________________________________________ Thought du jour [N]obody can be a great economist who is only an economist -- and I am even tempted to add that the economist who is only an economist is likely to become a nuisance if not a positive danger. F. Hayek, _Studies in Philosophy, Politics, and Economics_ (University of Chicago Press, 1967), p. 123: ____________________________________________________________ Thought du jour In the past 50 years, the proportion of bachelor's degrees awarded in economics has fallen ... from some 3.4 percent of all those awarded in 1950 to 1.4 percent in 1997-98 .... Some of that slack has been taken up by business programs, which handed out about 20 percent of all American bachelor's degrees in 1997- 98, up from about 17 percent in 1950. ... [U]nless economists abandon their preachy teaching style, students will probably continue to vote with their feet. William E. Becker, "How to make economics the sexy social science", The Chronicle of Higher Education, 7 December 2001, p. B10. [My comment: Professor Becker asserts that poor teaching explains the unpopularity of economics as an undergraduate major. Economists may indeed be poor (and preachy!) teachers, but can this account for the unpopularity of economics as an undergraduate major? Business students, after all, are forced to attend numerous courses taught by the economics faculty, yet undergraduate (and graduate) business studies are increasingly popular. The real reason for low and declining interest in an economics major, I suspect, is that a BA in economics is not very useful in the job market. Employers value the training that business schools provide in finance, accounting and marketing. Students know this and are simply responding to incentives.] ____________________________________________________________ Thought du jour Some people believe labor-saving technological change is bad for workers because it throws them out of work. This is the Luddite fallacy, one of the silliest ideas to ever come along in the long tradition of silly ideas in economics. .... The original Luddites were hosiery and lace workers ... [who] smashed knitting machines that embodied new labor- saving technology as a protest against unemployment (theirs), publicizing their actions in circulars mysteriously signed "King Ludd". Smashing machines was understandable protection of self-interest for the hosiery workers [for] they had skills specific to the old technology .... English government officials, after careful study, addressed the Luddites' concerns by hanging fourteen of them in January 1813. The intellectual silliness came later, when some thinkers generalized the Luddites' plight into the Luddite fallacy: that an economy-wide technical breakthrough enabling production of the same amount of goods with fewer workers will result in an economy with--fewer workers. Somehow it never occurs to believers in Luddism that there's another alternative: produce more goods with the same number of workers. .... The Luddite fallacy is very much alive today. Just check out such a respectable document as the annual Human Development Report of the United Nations Development Program. .... The 1996 Human Development Report frets about "jobless growth" in many countries. The authors say "jobless growth" happens whenever the rate of employment growth is not as high as the rate of output growth, which leads to "very low incomes" for millions of workers. The 1993 Human Development Report expressed the same concern ... The authors ... forgot that having GDP rise faster than employment is called _growth of income per worker_, which happens to be the only way that workers' "very low incomes" can increase. William Easterly, The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics (MIT Press, 2001), pp. 53-54. ____________________________________________________________ Thought du jour A State which dwarfs its men, in order that they may be more docile instruments in its hands even for beneficial purposes, will find that with small men no great thing can really be accomplished. J.S. Mill, On Liberty (1859), ch. 5. ____________________________________________________________ Thought du jour Gatt [the General Agreement on Tariffs and Trade] was the precursor of the WTO and, with hindsight, its boring name was a huge advantage. If you want to confer quietly and unmolested, it is unwise to call yourself the World Bank, the World Economic Forum or the International Monetary Fund. John Kay, "The great paradox of globalisation", Financial Times, 14 November 2001. ____________________________________________________________ Thought du jour The continued devalution of our dollar degrades all of our capital stock so that others can pick it up wholesale. At present they are soaking up our oil companies; soon we will be displacing Costa Rica as a retirement destination --- inexpensive, but with sub standard medical care. Robert Copps, Vancouver. Letter to the Editor, Financial Post, 12 November 2001. ____________________________________________________________ Thought du jour Japan's social stability is based on employment security, especially for blue-collar workers in big manufacturing industry, and that is eroding fast. .... Manufacturing's share of total employment is still higher than in almost any other developed country-- around a quarter of the total--and Japan has practically no labour market and little labour mobility. Psychologically, too, the country is least prepared for the decline in manufacturing. After all, it owed its rise to great-economic-power status in the second half of the 20th century to becoming the world's manufacturing virtuoso. One should never underrate the Japanese. Throughout their history they have shown unparalleled ability to face up to reality and to change practically overnight. But the decline in manufacturing as the key to economic success confronts Japan with one of the biggest challenges ever. Peter Drucker, "The Next Society: A Survey of the Near Future", The Economist, 3 November 2001, p. 12. ____________________________________________________________ Thought du jour [Mr Bernardo Huberman, author of the recently published book "The Laws of the Web: Patterns in the Ecology of Information." has] made some interesting discoveries about predicting market behaviour. The stock market, for example, represents the views of many people regarding the price of an individual stock. It is accepted that the stock price of a company is "perfect" in that it represents all of the known information about the company, its market and its future prospects. However, Mr Huberman says an extremely accurate forecasting tool can be created with much smaller groups of people - as little as 8 or 9 people. ... [T]he behaviour of large numbers of people can be described using similar approaches used to model the behaviour of large numbers of particles in physics, or the behaviour of inanimate systems. Tom Foremski, "The hidden order of the internet", Financial Times, 12 November 2001. ____________________________________________________________ Thought du jour Why does the Scottish diaspora need wooing, when 33m Irish- American breasts swell with romantic pride at the thought of their origins? The difference is not the result of clever marketing by the Irish: it lies in the different ways Scottish and Irish migration came about. .... Irish migrants tended to be unskilled and poor (and Democrats). Perceiving themselves as forced into exile by the English, they consoled themselves by supporting the cause of Irish liberation. The Scots, on the other hand, had left voluntarily. Many of them had a bit of capital and rose easily through American society (and joined the Republican Party). "Scots abroad: Keep your kilt to yourself", Economist, 20 October 2001. ____________________________________________________________ Thought du jour One might think that fundamentalism has always existed. This is not so -- it has arisen in response to the globalising influences we see all round us. The term itself dates from the turn of the century, when it was used to refer to the beliefs of some Protestant sects in the US, particularly those who rejected Darwin. .... It has come into common coinage only since the 1960s. Fundamentalism is not the same as either fanaticism or authoritarianism. Fundamentalists call for a return to basic scriptures or tests .... Only they have access to the 'exact meaning' of the texts. .... Whatever form it takes ... [fundamentalism] is edged with the possibility of violence, and it is the enemy of cosmopolitan values. Anthony Giddens, _Runaway World_ (Profile Books, London, 1999), pp. 66,68. [Giddens is a Cambridge professor of sociology and Director of LSE.] ____________________________________________________________ Thought du jour These [anti-globalisation] organisations have highlighted the misery and drudgery, the oppression, hopelessness and voicelessness of much of the world's population. They impart, especially to young people, a sense of dedication to the cause of others less fortunate than most of those in the western world. Yet they impose little in the way of a burden on supporters, who do not have to work among the poor, attend party or group meetings, or donate regular sums. They offer spontaneity and fun, wrapped in moral outrage. They have another advantage. They are burdened with no ideology, programme or example. Socialism and Marxism are among their inspirations - but stripped of their less appealing elements. More than 30 years after the event, they have appropriated and given meaning to the 1968 Parisian wall slogan: "Be practical: demand the impossible!". By demanding the impossible, they have created a tide of support. "The centre-left needs a global vision" by John Lloyd, author of The Protest Ethic: how the anti- globalisation movement challenges social democracy (London, 2001). Financial Times, 5 November 2001. ____________________________________________________________ Thought du jour Argentina made the decision to tie itself to the mast of a hard peg. But once the ship was hit by a typhoon, it became impossible to avoid drowning. A series of shocks, including the strong dollar, the weak Real and now the global economic slowdown, has conspired against Argentina. But shocks happen. This experience strengthens the proposition that countries without a natural anchor currency should, if possible, choose a floating exchange rate and inflation targeting over a currency board or dollarisation. Martin Wolf, "Time for Plan B in Argentina", Financial Times, 31 October 2001. ____________________________________________________________ Thought du jour "JOIN THE WORLD MOVEMENT AGAINST GLOBALIZATION Placard held by a protestor of the WTO in Seattle, as reported by Anthony Giddens during a panel discussion on 'Globalisation and the State' at the UN, 2 November 2001. ____________________________________________________________ Thought du jour The links between gender, trade and growth differ across economies with diverse economic structures and social norms. These include employment and displacement effects, transformation of work, and shifts in the production of non- marketed goods and services. While in many developing countries international trade has increased women's wage employment, it has tended to involve jobs that are not consistent with the goals of quality employment creation. These considerations include the regularity of employment, working conditions, rights to worker representation, social protection, occupational risks, and the possibility of career advancement or skill-upgrading (ILO 1998a). Increased trade has also led to the intensification of women's unpaid and home-based work, decreases in women's access to land, and displacement of local women producer's in the informal sector. Whether trade agreements will support or hinder gender equality, sustainable development and human rights goals will depend on whether they take into account its gender dimensions and impacts. United Nations Development Fund for Women, "The Gender Dimensions of International Trade," Financing for Development Brief http://www.unifem.undp.org/ffd/ffd_brpaper6.html [My comment: Adam Smith would not approve. There is no discussion of how international trade affects the price and availability of goods _consumed_ by women.] ___________________________________________________________ Thought du jour "When you finish reading the memoirs of Ford or Iacocca, you do so with a sense of real relief that you have never been their immediate subordinate. No able person could enjoy working for anyone with such an overwhelming sense of their own rightness. And that is why such leaders find themselves surrounded by second- rate sycophants. Henry Ford ended his career able to confide only in his security chief. John Kay, "Makings of a boss", Financial Times, 31 October 2001. ____________________________________________________________ Thought du jour While the liquidity mechanism of the 19th century was based mostly on the gold standard, the 20th century monetary systems mostly utilized fiat currencies. The fact that most of the major currencies of the world markets were based on nominal fiat values, which were effectively off the gold standard, after 1973 meant a system where "countries give up the exchange rate as an instrument of monetary policy up- front and must accept whatever exchange rate the global system generates" (Adelman and Yeldan, 2000: 102). Set across a system of freely mobile international capital flows, flexible exchange rates amplify the swings in the financial markets by allowing speculation on foreign exchange markets that are excessively large; excessively liquid; excessively volatile; imperfectly informed; and subject to herd psychology. Erinç YELDAN, "The Developmental Agenda in the Age of Neoliberal Globalization", 7- 8 September 2001, Cape Town, South Africa, p. 4. http://www.unrisd.org/engindex/research/rethink.htm The reference is to Irma Adelman and Erinç Yeldan, "Is This the End of Economic Development?" _Structural Change and Economic Dynamics_ 11(2000), pp. 95-109. [My comment: Does this mean that Argentina is doing the right thing in keeping its peso pegged to the dollar, come hell or high water? Was it wrong for Brazil to devalue its 'hard' currency, the real?] ____________________________________________________________ Thought du jour All official debt to poor countries should be cancelled, and financial restitution made to Sub Sahara Africa for slavery, colonialism and the imposition of inappropriate programs and policies by the IMF and World Bank in the past two decades. Development assistance should not be conditional on trade and investment liberalization or privatization of state assets. It should be greatly increased and granted to poor countries on highly concessional terms for physical and social infrastructure, as was the practice prior to the 1980s. The World Bank should be brought under the direction of the Social and Economic Council of the United Nations. Development assistance should be governed by principles of parity between donors and recipients. International funding for "global public goods" and disaster relief should be increased. The United Nations must be strengthened and reformed to accord with the demographic realities of the 21 st century, with no permanent seats on an elected Security Council. Nothing less can assure peace, which is the ultimate pre- requisite of development. Kari Polanyi Levitt, "Reclaiming the right to development", 7-8 September 2001, Cape Town, South Africa. http://www.unrisd.org/engindex/research/rethink.htm ____________________________________________________________ Thought du jour We of the West are accused of sexism, racism, and imperialism, institutionalized in patriarchy and slavery, tyranny and exploitation. To these charges, and to others as heinous, we have no option but to plead guilty -- not as Americans, nor yet as Westerners, but simply as human beings, as members of the human race. ... In having practiced sexism, racism, and imperialism, the West was merely following the common practice of mankind through the millennia of recorded history. Where it is distinct from all other civilizations is in having recognized, named, and tried, not entirely without success, to remedy these historic diseases. And that is surely a matter for congratulation, not condemnation. Bernard Lewis "The Roots of Muslim Rage: Why so many Muslims deeply resent the West, and why their bitterness will not easily be mollified", The Atlantic Monthly, September 1990. http://www.theatlantic.com/issues/90sep/rage.htm ____________________________________________________________ Thought du jour [E]ven at present valuations returns on US stocks will probably be far below their historic average of 6-7 per cent a year, in real terms. But there is a huge stockbroking industry dedicated to convincing its clients that this cannot be true. Their job is to find measures that show equities are cheap when they are expensive. Martin Wolf, "A poor defence for share prices", Financial Times, 24 October 2001. ____________________________________________________________ Thought du jour It's not just that the killing of 5,000 people demands some sort of disincentivizing response. It's that the practical consequence of withdrawing from the Gulf will probably be the loss of more Americans. (It is less likely to be the loss of oil, since whoever controls the oil will presumably want to sell it.) Here's the obvious scenario: We withdraw. A radical Islamist wave sweeps the Gulf region, capturing several states. These states fail, as repressive states are wont to do, in that they are unable to give their ordinary citizens a more prosperous life. But they, or radical groups within them, are able to develop a few weapons of mass destruction. They continue to blame the West and especially the Great Satan for their economic failure; maybe they even hate us because (sorry!) we stand for "freedom," or what they regard as a blasphemous freedom. Eventually--sooner rather than later, and even though we've retreated from their neighborhood--they decide to righteously dispatch a few thousand or million more of us with nuclear or bio or chemical attacks. Mickey Kaus, "America, the Screw-Up?", Slate Magazine, 23 October 2001. www.slate.com ____________________________________________________________ Thought du jour [From examination of a remarkable passage from the 1998 UNCTAD World Investment Report], [i]t would seem that a variant of George Orwell's 'Newspeak' has been developed in UN circles in Geneva. Readers of Orwell's novel, 1984, will recall that Newspeak is a language specially created by government to serve ideological needs and ensure conformity, designed progressively to replace standard English ('Oldspeak') as a means of communication. David Henderson: "The MAI Affair: A Story and Its Lessons", Royal Institute of International Affairs, 1999, page 83. http: //www.cairnsgroupfarmers.org/ni/reportspapers/maipaper.pdf ____________________________________________________________ Thought du jour The current crop of terrorists, unlike the bombers of World War II, has no chance of conquering us or (realistically) of killing a large fraction of our population. They cannot destroy us; our biggest risk is our own panic. What we face is terrorism in the most elementary sense: actions whose hoped-for impact is paralysis of the target rather than direct damage from the action itself. We cannot appease these terrorists or surrender to them, any more than Londoners could give in under the Blitz. We will track them down, because we are much stronger than they and we have no other choice. Jared Diamond (author of _Guns, Germs, and Steel_), "Keeping Panic at Bay", New York Times Week in Review, October 21, 2001. www.nytimes.com ____________________________________________________________ Thought du jour It is necessary that those who masterminded the attacks on Tuesday 11th September should be brought to justice; but parallel with the steps needed to achieve this should be international efforts to remove the injustice and poverty that provide the conditions that create such despair in persons that they are moved to take such awful actions in the first place. Geoff Harcourt, (Cambridge University, UK) "An International Marshall Plan", post-autistic economics newsletter, Issue no. 9, 20 October 2001 back issues at www.paecon.net [My comment: Is it true that the actions of Osama bin Laden and his suicidal hijackers result from the injustice and poverty they have suffered? Is it possible that they advocate the murder of Americans and Jews only as a way to combat injustice and poverty? If so, why, then, do they not target Saudi Arabia, which long ago stripped Mr. bin Laden of his citizenship?] ____________________________________________________________ Thought du jour Robert Hall of Stanford University, has ... tried to do for markets what 19th-century physicists tried to do for the Newtonian view of the universe. They invented the ether. He has invented something called e- capital. E-capital is a body of technical and organisation know-how, captured neither in the remuneration of employees nor in physical capital. To justify the stock market valuations of the 1990s, Prof Hall has had to imagine a huge quantity of this stuff. Between 1990 and 1999, the stock of e-capital is said to have risen from almost nothing to equal the total value of all tangible corporate assets. .... And then, most miraculous thing of all, in 2000 and 2001 trillions of dollars of the stuff vanished. The beauty of Prof Hall's analysis is that it is logical, internally consistent - and unbelievable. .... There are only two defensible views of the current state of the market. The first is that the market can deviate massively from fundamental value and has done so and that the correction has not yet eliminated that overvaluation. The second is that the market is reasonably valued because people are prepared to accept far lower returns from holding equities than in the past. The conclusion is that equities offer modest - or, more likely, a continuing period of negative - real returns. Martin Wolf, "The price of stocks is still high", Financial Times, 17 October 2001. ____________________________________________________________ Thought du jour In their political resistance to Greece and Rome, the Jews failed. Initially, under the Maccabees, they were successful in asserting their independence against the Macedonian ruler of Syria, who claimed lordship over them, and for a while restored the independence of the kingdom of Judaea. But against the might of Rome they could not prevail, and in revolt after revolt, ... they were crushed and reduced to slavery. The most important of these revolts began in 66 CE. ... [T]he rebels were overwhelmed, and in 70 CE, the Romans captured Jerusalem and destroyed the second Temple, which had been built by the exiles returning from Babylon. Even this did not end Jewish resistance. After the revolt of Bar- Kokhba in 135 CE, the Romans decided once and for all to rid themselves of this troublesome people. ... [T]hey sent a large part of the Jewish population into captivity and exile .... Jerusalem was renamed Aelia Capitolina, and a temple to Jupiter built on the site of the destroyed Jewish Temple. The names Judaea and Samaria were abolished, and the country renamed Palestine, after the long-forgotten Philistines. Bernard Lewis, The Middle East: A Brief History of the Last 2,000 Years (Scribner, New York, 1995), pp. 30-31. ____________________________________________________________ Thought du jour [America] intervened heavily in the [World] Bank and the [International Monetary] Fund during the second half of the 1980s and through the 1990s ... under the banner of "civil society" being as--or more--legitimate than the elected governments of developing countries and their state representatives. .... [The World Bank's current] protocol of consultation with NGOs about country assistance strategies ... in some cases has gone with the sidelining of the government. Unkind people might observe that al- Qaeda is an NGO, and one with extraordinarily high levels of social capital. Robert Wade, London School of Economics, letter to the editor, The Economist, 13 October 2001. [My comment: It is surprising that political scientist Robert Wade, author of 'Governing the Market', has come to accept this view, so forcefully articulated by liberal economists such as Henderson and Bhagwati. Does this represent a new consensus regarding NGOs?] ____________________________________________________________ Thought du jour European countries are much more generous to the poor relative to the US level of generosity. ... [T]he differences appear to be the result of racial heterogeneity in the US and American political institutions. Racial animosity in the US makes redistribution to the poor, who are disproportionately black, unappealing to many voters. ALBERTO ALESINA, EDWARD L. GLAESER,and BRUCE SACERDOTE, "Why Doesn't the US Have a European-Style Welfare System?" NBER Working Paper No. W8524, 1 October 2001. www.nber.org ____________________________________________________________ Thought du jour It remains true that a prolonged and expensive war leads not to depressed demand but to inflationary overstretch. The problem of war economics is not how to stimulate domestic spending but how to keep it down to release resources for arms. Almost no prolonged conflict in history has been financed just by taxes - though Hugh Gaitskell tried in Korea. The art of war finance is to borrow on the best possible terms without imposing an excessive burden on the postwar generation. This was the theme of Lord Keynes's How to Pay for the War (1940), which his biographer Robert Skidelsky regards as arguably "the quintessence of his achievement". Keynes's idea was that compulsory savings bonds should be issued, which would be repaid later to offset the widely expected postwar slump. A vestige of this idea emerged from the Treasury in the form of "postwar credits", which were repaid over many years to taxpayers who reached pensionable age. It has taken a long time for the message of the real Keynes - as distinct from the Keynesians - to percolate. Samuel Brittan, "Thinking again about how to pay for the war", Financial Times, 11 October 2001. ____________________________________________________________ Thought du jour Surprisingly, one of the critics here [of the proposed Multilateral Agreement on Investment] is Professor Jagdish Bhagwati, who has argued [in a letter to the Financial Times, 22 October 1998] that the MAI "... is conceived as a set of rights for corporations, instead of systematically including also their obligations. The latter would also require that notions such as the 'stakeholder' obligations of corporations to the communities they operate in should also be laid down in the agreement." What this might mean is unclear. If 'stakeholder obligations' should be 'systematically' included, presumably in writing, in investment agreements affecting foreign-based enterprises, why should they not apply equally to domestic firms? Why should they not then form part of the legal and regulatory framework which governs the conduct of both sets of companies? Just what are the obligations, if any, that should be enforced, distinctively and exclusively, and - for the first time in history - through an international agreement, on newly-entering foreign- based corporations? David Henderson: "The MAI Affair: A Story and Its Lessons", Royal Institute of International Affairs, 1999, page 62. http: //www.cairnsgroupfarmers.org/ni/reportspapers/maipaper.pdf ____________________________________________________________ Thought du jour That residents and non-residents should be treated alike is not an end in itself. At a deeper level, reducing the extent of discrimination as between them is a means to enlarging the domain of economic freedom -- both for its own sake, as a leading dimension of personal freedom more generally, and as a means to greater prosperity. The case for closer cross- border economic integration forms part of the wider case for economic liberalism. David Henderson: "The MAI Affair: A Story and Its Lessons", Royal Institute of International Affairs, 1999, page 57. http: //www.cairnsgroupfarmers.org/ni/reportspapers/maipaper.pdf ____________________________________________________________ Thought du jour Islamist fundamentalists don't object to the things that campus leftists dislike about America. They object to the things that they like, such as freedom of speech, sexual equality and racial diversity. Ho Chi Minh's communists had a sort of revolutionary chic. The Taliban's penchant for throwing acid in the faces of women who fail to wear veils and its lively debate as to whether the proper way to deal with homosexuals is to hurl them from tall buildings or bury them alive does not endear it to Berkeley. Lexington, "Treason of the intellectuals?", The Economist, 5 October 2001. ____________________________________________________________ Thought du jour Economics aspires to be a science like astronomy or physics, but in fact there's an alarming amount of psychology in it. Recessions are self-fulfilling prophecies. If enough people believe one is coming, then it will. The problem economists have in predicting the reaction to Sept. 11 is that we haven't been through anything quite like this before. G7 economies like Japan's and California's seem to recover pretty quickly from natural disasters such as earthquakes. But earthquakes don't declare war on their victim countries and vow to return. William Watson, "The public virtue of reckless spending", Financial Post, September 29, 2001. www.nationalpost.com ____________________________________________________________ Thought du jour Western policymakers face harsh realities. They can try to make their countries safer. They can act directly against the terrorist threat. They should try to cajole Israel into a peace acceptable to the Palestinians, though that would not end terrorism by those who believe the Jewish state should disappear. They can also encourage political and economic liberalisation among their clients. But the west cannot make the region rich or politically stable. It cannot secure an accommodation between the traditions of Islam and the demands of the modern world. All it can do is the best it can with the world that there is - and endure. Martin Wolf, "The economic failure of Islam", Financial Times, 26 Sept. 2001. www.ft.com ____________________________________________________________ Thought du jour In a recent article in the British leftwing magazine the New Statesman (September 24), John Gray, a professor at the London School of Economics, argues that the end of globalisation is not just inevitable but highly desirable. Globalisation, he argues, is a deluded secular creed, similar to Marxism. "For market liberals," he declares, "there is only one way to become modern. All societies must adopt free markets." This comparison of a belief in liberty and democracy with Marxism - the ideology of totalitarian despots that, on some calculations, cost 100m lives - is puerile. More important, like many critics, Prof Gray indulges in caricature. Globalisation is no more than an (admittedly ugly) name for the process of integration across frontiers of liberalising market economies at a time of rapidly falling costs of transport and communications. Prof Gray sets against his Aunt Sally of globalisation as a utopian form of laisser faire what he claims is an alternative. "As far as possible, rules on trade and the movement of capital should be left to multilateral agreements between sovereign states. If countries opt to stay out of global markets, they should be left in peace. They should be free to find their own version of modernity, or not to modernise at all." So they should. That is, of course, exactly how the world is organised. The World Trade Organisation is a multilateral agreement among sovereign states. Nobody has to join it, just as nobody has to borrow from the International Monetary Fund or the World Bank. Nobody needs to participate in trade and nobody has to have open financial markets. But few governments can get away with turning their countries into North Korea. Governments may "opt to stay out of markets". But enslaved peoples detest the poverty that results. Martin Wolf, "How trade can help the world", Financial Times, 3 October 2001. www.ft.com ____________________________________________________________ Thought du jour Contrary to what is sometimes assumed, the NGOs are not authentic representatives of 'civil society' as a whole. In any case, the notion that 'civil society' has claims of its own to speak for the people of a country has no basis when that country has a democratically elected and responsible government. Persons who are neither elected nor politically accountable can have no such status. David Henderson: "The MAI Affair: A Story and Its Lessons", Royal Institute of International Affairs, 1999, page 14. http: //www.cairnsgroupfarmers.org/ni/reportspapers/maipaper.pdf ____________________________________________________________ Thought du jour The main things holding the anti-globalist coalition together are a suspicion of markets, a strongly collectivist instinct and a belief in protest as a form of moral uplift. Once upon a time this combination would have pointed to socialism as a coherent alternative to "the system". But socialism, after the unfortunate experiences of the 20th century, is not quite ready yet for release back into the community. "A different manifesto", The Economist, 28 September 2001. ____________________________________________________________ Thought du jour The power of even the biggest companies is nothing compared with that of governments--no matter how small or poor the country concerned. The value added of Microsoft is a little over $20 billion a year, about the same as the national income of Uruguay. Does this make it remotely plausible that Bill Gates has more sway over the people of Uruguay than their government does? Or take Luxembourg--another small economy with, presumably, a correspondingly feeble state. Can Microsoft tax the citizens of Luxembourg (whose government collected 45% of GDP from them last year), conscript them if it has a mind to, arrest and imprison them for behaviour it disapproves of, or deploy physical force against them at will? No, not even using Windows XP. "Is government disappearing?", The Economist, 28 September 2001. www.economist.com In no country is it legal for individuals, acting in their own self-interest, to force others to do something against their will. In many countries citizens are allowed to organize business firms, trade unions or religious societies, but these institutions rely, for the most part, on the market and on persuasion to recruit members and to influence the behaviour of others. Large corporations such as General Motors (or Volkswagen or Toyota) offer automobiles for sale. They persuade, or attempt to persuade, with advertising, but there is no way they can force consumers to purchase these products. Market transactions are voluntary, as is participation in civic and social causes. Individuals purchase goods or services only if they find the cost to be less than the satisfaction or utility they expect to derive from them. And they join a firm, church or sporting club only if it is in their interest to do so. The state is different. It is not a voluntary organization. It is concerned not with maximization of profit or utility, but with public policy. More importantly, it enjoys a monopoly of legitimate force, limited perhaps by democratic tradition, a written constitution or a bill of rights. The state is able to (a) impose regulations on and collect taxes from other sectors of the economy; (b) produce goods and services that it can either sell in the market or supply free of charge to individuals and the community; and (c) distribute funds through transfers. United Nations, Public sector indicators: Report prepared by the Secretariat, 22 March 2000. ST/SG/AC/6/2000/L.2 http://www.unpan.org/statistical_database-publicsector.asp ____________________________________________________________ Thought du jour It is naturally difficult to understand why people hate us enough to immolate themselves by flying jetliners into buildings, but they are said to abhor our freedom and our rationality. This is not as implausible as it sounds, even to those who cherish both. Our best-known philosopher, George Grant, wrote about how we were excessively devoted to freedom and science -- though it must immediately be stressed that Grant was a democrat, a Christian and, in World War II, a conscientious objector, with not a violent bone in his body. William Watson, "Do we destroy freedom to save it?", Financial Post, 15 September 2001. http://nationalpost.com/ ____________________________________________________________ Thought du jour Most fundamentalists are in no way terrorists, far from it. But they can offer a reason to die - or to kill. Martin Wolf, "The economic failure of Islam", Financial Times, 26 Sept. 2001. www.ft.com ____________________________________________________________ Thought du jour Less free societies are in many ways less vulnerable. There was little terrorism in the old Soviet Union, except that which the government inflicted on its own people. Would-be counter-revolutionaries could not move around so easily, nor could they buy their equipment from well-stocked stores. A legal system that could impose savage punishments on a mere suspicion deterred all but the bravest. And even when terrorists did blow things up, the fact that the state could hush it up greatly reduced their ability to spread alarm. Terrorists in a closed society do not make the evening news. "Hot leads, stolen identities", Sep 20th 2001 From The Economist Global Agenda www.economist.com ____________________________________________________________ Thought du jour At one time, the word 'imperialism' was commonly used to describe the Western impact [on the Middle East], but this becomes increasingly implausible as the brief period of direct European rule recedes into the past, and the United States remains remote and uninvolved. A more accurate expression of how the Western impact is perceived by those who oppose it was given by [Iran's Ayatollah] Khomeneini, when he spoke of the United States as 'the Great Satan'. Satan is not an imperialist; he is a tempter. He does not conquer; he seduces. The battle is still going between those who hate and fear the seductive and, in their view destructive, power of the Western way of life, and those who see it as a new advance and a new opportunity in a continuing and fruitful interchange of cultures and civilizations. Bernard Lewis, The Middle East: A Brief History of the Last 2,000 Years (Scribner, New York, 1995), pp. 17-18. ____________________________________________________________ Thought du jour Soviet secularism, like Soviet consumerism, holds no temptation for the Muslim masses, and is losing what appeal it had for Muslim intellectuals. More than ever before it is Western capitalism and democracy that provide an authentic and attractive alternative to traditional ways of thought and life. Fundamentalist leaders are not mistaken in seeing in Western civilization the greatest challenge to the way of life that they wish to retain or restore for their people. Bernard Lewis "The Roots of Muslim Rage: Why so many Muslims deeply resent the West, and why their bitterness will not easily be mollified", The Atlantic Monthly, September 1990. http://www.theatlantic.com/issues/90sep/rage.htm ____________________________________________________________ Thought du jour Soviet secularism, like Soviet consumerism, holds no temptation for the Muslim masses, and is losing what appeal it had for Muslim intellectuals. More than ever before it is Western capitalism and democracy that provide an authentic and attractive alternative to traditional ways of thought and life. Fundamentalist leaders are not mistaken in seeing in Western civilization the greatest challenge to the way of life that they wish to retain or restore for their people. Bernard Lewis "The Roots of Muslim Rage: Why so many Muslims deeply resent the West, and why their bitterness will not easily be mollified", The Atlantic Monthly, September 1990. http://www.theatlantic.com/issues/90sep/rage.htm ____________________________________________________________ Thought du jour Our abandonment of Israel might diminish one of Bin Laden's sources of suicidal recruits. But even if appeasing him were desirable, there's no reason to expect that cutting Israel loose would appease him. And what's true of Bin Laden is true of Islamic radicals more generally, especially those with some geographical distance from Israel itself. As Bernard Lewis explained in his still highly relevant article "The Roots of Muslim Rage [ http://go.msn.com/newsletter3817/60419.asp ] ," which appeared in the Atlantic a decade ago, radical Islam has a hatred of America that is clearly separable from its loathing for Israel and perhaps even more virulent. As evidence, Lewis notes that during the two decades when the Communist bloc was Israel's chief backer, there was no comparable Arab animus against the Soviets. Jacob Weisberg, "Bad for the Jews?", SLATE POLITICS, Fri., Sept. 21, 2001, www.slate.com ____________________________________________________________ Thought du jour The extreme Islamic groups behind the growing world terrorist threat rise out of, and are financed by, Middle East tyrannies that deny their citizens the basics of democracy, equality and economic freedom. If the people who wiped out much of the economic centre of New York were truly interested in world progress and the betterment of their people, they would be directing their assaults against their own governments. They would bomb the palaces, ride suicide planes into the power centres of their own leaders, foment terror and unrest against the repressive regimes that systematically deny their citizens the freedom and economic prosperity enjoyed by the West. Terence Corcoran, "Feeding anti-capitalism An amoral horror is being converted into a moral statement", National Post, 14 September 2001 ____________________________________________________________ Thought du jour What useful purpose can be served by the study of absurd opinions and doctrines that have long ago been exploded, and deserved to be? It is mere pedantry to attempt to revive them. The more perfect a science becomes the shorter becomes its history. ... Our duty with regard to errors is not to revive them, but simply to forget them. JB Say, Cours Complet d'Economie Politique Pratique, 1828-9. Quoted by T.W. Hutchison On Revolutions and Progress in Economic Knowledge, Cambridge University Press, 1978, p. 213. ____________________________________________________________ Thought du jour From the very beginning in the 1940s, the General Agreement on Tariffs and Trade explicitly excused low- income countries from the need to dismantle their import barriers and exchange controls. This permission probably lowered their national incomes, but it was consistent with the dominant protectionist and anti- global ideology prevailing in emerging nations at that time. Thus the succeeding rounds of liberalization under GATT, from the Dillon and Kennedy Rounds through the Uruguay Round, brought freer trade and higher incomes mainly to OECD members. Peter Lindert and Jeffrey Williamson, "Does Globalization Make the World More Unequal?", April 2001, p. 22. http://papers.nber.org/papers/W8228 ____________________________________________________________ Thought du jour The combination of political dictatorship and a more or less capitalist economy looks attractive to foreign investors. What could be better, after all? No unions to cause trouble, and there are none of those messy elections that make democratic systems so unpredictable. This combination is not unique to the People's Republic of China, of course. The model is Gen. Augusto Pinochet's Chile. Ian Buruma, "What Beijing Can Learn from Moscow", NY Times Magazine, 2 September 2001, p. 34. ____________________________________________________________ Thought du jour The free market is 'socialism' for the rich: the public pays the costs and the rich get the benefit - markets for the poor and plenty of state protection for the rich. Noam Chomsky, "How free is the Free Market?" a speech given in London in May, 1994. ____________________________________________________________ Thought du jour At first sight, Mosaic was unimpressive. The company's offices were above a bakery and sandwich shop in a strip mall. The most memorable aspect of my first visit was that the young woman who greeted me was agitated. There was a shortage of chairs, she explained, and she was anxious to get back to hers! I left excited by Mosaic's plans, eager to try its software and determined to write about the new company. Weeks later, Mosaic changed its name to Netscape. Is Kontiki another Netscape in the making? It would like to think so. Mike Homer, chief executive and former executive vice-president at Netscape, looks forward to making Kontiki's software, which users need to install on their PCs, as ubiquitous as the browser. However, Kontiki's software will come free of charge to end-users from day one. Revenues will come from internet publishers. With hindsight, it is easy to say that Netscape should have followed the same path. Louise Kehoe, "The next Netscape?", Financial Times, 8 August 2001. ____________________________________________________________ Thought du jour There is ... a very modern reason for advocating some form of non-work or property income for all. In recent times there has been a greater dispersion of market rewards for different types of work -- usually labelled growing inequality. This could well be a passing phase in economic development; but even passing phases can last several decades. It is surely better that those without the skills required in the modern economy - including among the skills a street-wise instinct for market opportunities - should be able to do some low-paid work, supplemented by other sources of income, and not be forced into relying solely on the dole. Many elements of such an approach exist already in Labours New Deal and social security reforms, which could be taken in gradual steps towards a universal minimum incomes and away from the present puritanical obsessions. Indeed there is today an organised movement towards what is known as Basic Income. In Europe its support tends to come from left-Liberal and Green groups. It is especially strong in Ireland and Finland; but it also has a certain amount of support among the US Democrats. But it is not only among the unorthodox Left that we find such ideas. They were inherent, even if he did not realise it, in the old slogan of Anthony Eden about a property-owning democracy. Milton Friedman was one of the pioneers of of a negative income tax which would be received by those whose income fell below a certain threshold, instead of the present mass of conditional social security payments for pensions, unemployment and other contingencies. As one would expect, John Stuart Will was sympathetic. Before World War II a thoughtful Liberal politician, Lady Rhys Williams put forward the idea of a social dividend for all as an alternative to the Beveridge proposals. Samuel Brittan, "In praise of free lunches", TLS, 24/08/01. http://www.samuelbrittan.co.uk/text88_p.html ` ____________________________________________________________ Thought du jour Everyone knows that economics is the dismal science. And almost everyone knows that it was given this description by Thomas Carlyle, who was inspired to coin the phrase by T. R. Malthus's gloomy prediction that population would always grow faster than food, dooming mankind to unending poverty and hardship. While this story is well-known, it is also wrong, so wrong that it is hard to imagine a story that is farther from the truth. At the most trivial level, Carlyle's target was not Malthus, but economists such as John Stuart Mill, who argued that it was institutions, not race, that explained why some nations were rich and others poor. Carlyle attacked Mill, not for supporting Malthus's predictions about the dire consequences of population growth, but for supporting the emancipation of slaves. It was this fact--that economics assumed that people were basically all the same, and thus all entitled to liberty--that led Carlyle to label economics "the dismal science." David M. Levy and Sandra J. Peart, "The secret history of the dismal science", 22 January 2001. http://www.econlib.org/library/Columns/LevyPeartdismal.html ____________________________________________________________ Thought du jour So what's the new deal? What is deep integration? Is it inevitable? And would it finally deliver the U.S.-style incomes that were hoped for from the FTA? The short answers are: There are different levels of deep. No, it's not inevitable. And, alas, it's very hard to know whether it would have the big economic payoff that Canadians who would like to stay here hanker after. Deeper integration could involve any number of things: A customs union, under which both countries charge the same duties on imports from third parties; A currency union, in which we both use the same money; A limited form of political union, in which we adopt common standards on environmental protection, product safety, stumpage fees for softwood lumber, labour practices, drug approvals and so on. Or even, eventually, outright political union. (North Dakota reportedly is considering shortening its name to just Dakota. When we became the 51st state in the American union, we could enter as the new North Dakota.) William Watson, "Border question won't go away", Financial Post, 18 August 2001. www.nationalpost.com ____________________________________________________________ Thought du jour It is of great importance in a republic not only to guard the society against the oppression of its rulers, but to guard one part of the society against the injustice of the other part. Alexander Hamilton or James Madison, Federalist Paper No. 51, 8 February 1788. ____________________________________________________________ Thought du jour [W]hat is the case for pre-funding [of public pensions, known as social security in the USA]? More generally, should all anticipated future needs be pre-funded? I know that I will need to buy food for the rest of my life; but I do not accumulate a food fund, but intend to pay my grocery bills out of future earnings. The reason for making a pension accumulation is a different one--namely that I intend to retire, that is, to stop producing goods which I can exchange for other goods; no such accumulation is needed in a world without retirement, where people are immortal, or remain healthy and active in the labor force until their death. Such a world is mythical for the individual but is exactly the case for a country, which does not have to take action to anticipate a time when production will cease. The fact that countries are immortal is central: from an economic perspective, it makes pre-funding unnecessary ...." Nicholas Barr, "Reforming Pensions: Myths, Truths, and Policy Choices", IMF Working Paper WP/00/139, August 2000, pp. 17- 18. ____________________________________________________________ Thought du jour In fairness to [economist John] Williamson, however, it is important to stress that he was an innocent victim of the success of his very useful summary. ... Williamson's efforts at clarifying the meaning and implication of the Washington Consensus were not enough to compensate for the distortions resulting from the term's global popularity and its frequent misuse. Very soon, even the ten prescriptions were not that well known and the term Washington Consensus acquired a life of it's own, becoming a brand name known worldwide and used quite independently of its original intent and even of its content. Moises Naim, "Fads and Fashions in Economic Reforms: Washington Consensus or Washington Confusion?" 29 October 1999. http: //www.imf.org/external/pubs/ft/seminar/1999/reforms/Naim.HTM ____________________________________________________________ Thought du jour ...no two countries with a McDonald's have ever fought each other? I am not sure this is right but, if it is, we can hardly be expected to believe that it results from the political influence of McDonald's. If I really thought McDonald's could spread world peace, I might even be willing to eat its products John Kay, "Choice as control", Financial Times, 22 August 2001. ____________________________________________________________ Thought du jour Globalization is widely perceived as having contributed to uncertainty and setbacks in living standards for many, particularly in less developed countries and for low skilled workers globally. United Nations, 2001 Report on the World Social Situation, "Introduction" (first sentence of second paragraph). http://www.un.org/esa/socdev/rwss/overview.html ____________________________________________________________ Thought du jour "Information wants to be free." "The Internet can't be controlled." We've heard it so often that we sometimes take for granted that it's true. But THE INTERNET CAN BE CONTROLLED, and those who argue otherwise are hastening the day when it will be controlled too much, by the wrong people, and for the wrong reasons. Charles C. Mann,Taming the Web, Technology Review, September 2001. http://www.technologyreview.com/magazine/sep01/mannall.asp ____________________________________________________________ Thought du jour To: philip.stephens@ft.com cc: Subject: Re: A poor case for globalisation Mr Stephens, In your 16 August 2001 column, "A poor case for globalisation", you score a number of excellent points. I agree completely that globalisation, or 'capitalism without frontiers', is a means, for "the purpose is to raise everyone's living standards." Adam Smith famously expressed much the same view in 1776: "Consumption is the sole end of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer." But I do not understand why, in the previous paragraph, you suggest "Western politicians may also admit that trade liberalisation has been skewed to their advantage. Developing nations have been pressured to open their markets. Rich ones have kept the doors slammed shut to their agricultural products and textiles. " Do consumers in rich countries somehow gain when forced to purchase high-priced food and clothing? What advantage is it for rich countries to slam their doors to cheap supplies of these goods? The only way I can make sense of this statement is in terms of the mercantilist arguments that Adam Smith demolished so effectively 225 years ago. Or, am I missing something? Yours sincerely, Larry Willmore United Nations, DC1-922, NY 10017 ____________________________________________________________ Thought du jour Slavery was horrible, but the Holocaust was far worse, and it is wrong to assert otherwise. Those who, along with their parents, spouses, children and entire extended families, were murdered by Hitler would have instantly traded death for a slavery no matter how brutal, with its possibility of eventual freedom and of descendants. MICHAEL H. DAVIS, letter to the editor, New York Times, 15 August 2001. ____________________________________________________________ Thought du jour "Compassionate conservatism" in ancient Greece: Where there are revenues the demagogues should not be allowed after their manner to distribute the surplus; the poor are always receiving and always wanting more and more, for such help is like water poured into a leaky cask. Yet the true friend of the people should see that they be not too poor, for extreme poverty lowers the character of the democracy; measures therefore should be taken which will give them lasting prosperity; and as this is equally the interest of all classes, the proceeds of the public revenues should be accumulated and distributed among its poor, if possible, in such quantities as may enable them to purchase a little farm, or, at any rate, make a beginning in trade or husbandry. Aristotle, 350 B.C.E., Politics, Book Six, Part V. Translated by Benjamin Jowett. http://socserv2.socsci.mcmaster.ca: 80/~econ/ugcm/3ll3/aristotle/Politics.pdf http://classics.mit.edu/Aristotle/politics.html ____________________________________________________________ Thought du jour A house may be large or small; as long as the neighboring houses are likewise small, it satisfies all social requirement for a residence. But let there arise next to the little house a palace, and the little house shrinks to a hut. The little house now makes it clear that its inmate has no social position at all to maintain, or but a very insignificant one; and however high it may shoot up in the course of civilization, if the neighboring palace rises in equal of even in greater measure, the occupant of the relatively little house will always find himself more uncomfortable, more dissatisfied, more cramped within his four walls. Karl Marx, 1847, Wage Labour and Capital, published 1849 in German and 1891 in English. From the chapter "Relation of Wage-Labour to Capital". http: //csf.colorado.edu/mirrors/marxists.org/archive/marx/works/18 47/wage-labour/ ____________________________________________________________ Thought du jour Those who lecture protesters on the virtues of free trade should look at their own levels of agricultural protectionism. "Editorial comment: An answer for the protesters", Financial Times, 10 August 2001. ____________________________________________________________ Thought du jour What is it about a beard that turns people off? They were de rigueur in most ancient civilizations up to the Greek and Roman eras, when generals began urging soldiers to shave for various reasons (beards are convenient handholds for enemy soldiers; shaving distinguishes friendly soldiers from barbarian enemies). Since then shaving has been the norm in most Western societies. Why? Anthropologist Desmond Morris thinks that shaving brings three advantages: 1) It makes you look younger (babies are smooth faced); 2) it makes you look friendlier (it's easier to read your expressions and see your smile); and 3) it makes you appear cleaner (this is of dubious medical value). Michael Brus, "Beards: Why are they such a turnoff?", Slate Magazine, 9 August 2001. ____________________________________________________________ Thought du jour " Every school of thought is like a man who has talked to himself for a hundred years and is delighted with his own mind, however stupid it may be. J.W. Goethe, 1817, Principles of Natural Science ____________________________________________________________ Thought du jour It is the maxim of every prudent master of a family never to attempt to make at home what it will cost him more to make than to buy. The taylor does not attempt to make his own shoes, but buys them of the shoemaker. The shoemaker does not attempt to make his own clothes, but employs a taylor. The farmer attempts to make neither the one nor the other, but employs those different artificers. All of them find it for their interest to employ their whole industry in a way in which they have some advantage over their neighbours, and to purchase with a part of its produce, or what is the same thing, with the price of a part of it, whatever else they have occasion for. What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom. .... By means of glasses, hotbeds, and hot walls, very good grapes can be raised in Scotland, and very good wine too can be made of them at about thirty times the expence for which at least equally good can be brought from foreign countries. Would it be a reasonable law to prohibit the importation of all foreign wines merely to encourage the making of claret and burgundy in Scotland? But if there would be a manifest absurdity in turning towards any employment thirty times more of the capital and industry of the country than would be necessary to purchase from foreign countries an equal quantity of the commodities wanted, there must be an absurdity, though not altogether so glaring, yet exactly of the same kind, in turning towards any such employment a thirtieth, or even a three- hundredth part more of either. Adam Smith, 1776, Wealth of Nations, Book IV, chapter 2. ____________________________________________________________ Thought du jour The policy of reducing Germany to servitude for a generation, of degrading the lives of millions of human beings, and of depriving a whole nation of happiness should be abhorrent and detestable -- abhorrent and detestable, even if it were possible, even if it enriched ourselves, even if it did not sow the decay of the whole civilised life of Europe. Some preach it in the name of justice. In the great events of man's history, in the unwinding of the complex fates of nations, justice is not so simple. And if it were, nations are not authorised, by religion or by natural morals, to visit on the children of their enemies the misdoings of parents or of rulers. J.M. Keynes, 1919, The Economic Consequences of the Peace, chapter 5. posted at http://cepa.newschool.edu/het/ ____________________________________________________________ Thought du jour From the late 1950s to the mid-1990s, Thailand achieved sustained aggregate economic growth ... [but this] owed little to interventionist economic planning. ... [I] ndustrial policy, in the form of measures ostensibly intended to promote exports, did not favour industries which subsequently performed well in terms of exports. Industry policy therefore does not provide a credible explanation for Thailand's impressive export performance over the two decades ending in 1995. 'Picking the winners' did not work. Peter G. Warr, "Myths about miracles: the case of Thailand", Journal of International Trade and Development, 9:1 (2000), p. 132. ____________________________________________________________ Thought du jour [T]here is no basis for Mundell's statement: "If Canada had the same currency as the United States and a genuine free trade area, Canadians would have as high or higher a standard of living as the average American." ... [P] rovinces, states and cities share currencies and free trade areas, but the experience of Canada's have-not provinces and US inner cities demonstrates the limits of the benefit that fixity confers. William B.P.Robson, "New currency regimes: how green the grass? how high the fence?", Policy Options, May 2001, p. 48. http://www.irpp.org/po/ ____________________________________________________________ Thought du jour The famous dictum 'Power tends to corrupt and absolute power corrupts absolutely' in context: I cannot accept your canon that we are to judge Pope and King unlike other men, with a favorable presumption that they did no wrong.If there is any presumption it is the other way against holders of power, increasing as the power increases. Historic responsibility has to make up for the want of legal responsibility. Power tends to corrupt and absolute power corrupts absolutely. Great men are almost always bad men, even when they exercise influence and not authority: still more when you superadd the tendency or the certainty of corruption by authority. There is no worse heresy than that the office sanctifies the holder of it. That is the point at which the negation of Catholicism and the negation of Liberalism meet and keep high festival, and the end learns to justify the means. Lord (John Dalberg) Acton's letter to Bishop Mandell Creighton, 5 April 1887. ____________________________________________________________ Thought du jour Those who live in a cold climate and in Europe are full of spirit, but wanting in intelligence and skill; and therefore they retain comparative freedom, but have no political organization, and are incapable of ruling over others. Whereas the natives of Asia are intelligent and inventive, but they are wanting in spirit, and therefore they are always in a state of subjection and slavery. But the Hellenic race, which is situated between them, is likewise intermediate in character, being high-spirited and also intelligent. Hence it continues free, and is the best- governed of any nation .... Aristotle, 350 BCE, Politics, Book Seven, Part VII, translated by Benjamin Jowett. http://classics.mit.edu/Aristotle/politics.html ____________________________________________________________ Thought du jour Since the time of generation is commonly limited within the age of seventy years in the case of a man, and of fifty in the case of a woman, the commencement of the union should conform to these periods. The union of male and female when too young is bad for the procreation of children; in all other animals the offspring of the young are small and in- developed, and with a tendency to produce female children, and therefore also in man, as is proved by the fact that in those cities in which men and women are accustomed to marry young, the people are small and weak; in childbirth also younger women suffer more, and more of them die .... It also conduces to temperance not to marry too soon; for women who marry early are apt to be wanton; and in men too the bodily frame is stunted if they marry while the seed is growing (for there is a time when the growth of the seed, also, ceases, or continues to but a slight extent). Women should marry when they are about eighteen years of age, and men at seven and thirty; then they are in the prime of life, and the decline in the powers of both will coincide. .... As to the exposure and rearing of children, let there be a law that no deformed child shall live, ... [and] when couples have children in excess, let abortion be procured before sense and life have begun; what may or may not be lawfully done in these cases depends on the question of life and sensation. And now, having determined at what ages men and women are to begin their union, let us also determine how long they shall continue to beget and bear offspring for the state; men who are too old, like men who are too young, produce children who are defective in body and mind; the children of very old men are weakly. The limit then, should be the age which is the prime of their intelligence, and this in most persons, according to the notion of some poets who measure life by periods of seven years, is about fifty; at four or five years or later, they should cease from having families; and from that time forward only cohabit with one another for the sake of health; or for some similar reason. Aristotle, 350 BCE, Politics, Book Seven, Part XVI, translated by Benjamin Jowett. http://classics.mit.edu/Aristotle/politics.html ____________________________________________________________ Thought du jour Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer. The maxim is so perfectly self evident that it would be absurd to attempt to prove it. But in the mercantile system the interest of the consumer is almost constantly sacrificed to that of the producer; and it seems to consider production, and not consumption, as the ultimate end and object of all industry and commerce. Adam Smith, 1776, Wealth of Nations ____________________________________________________________ Thought du jour To simplify severely, the Friedman view is typically American and the Mundell view typically Canadian. Friedman comes to the conclusion that both small and large countries can prosper under flexible exchange rates, and sees the proliferation of currencies and central banks as a natural and useful consequence of the growth in the number of nation states. Mundell, by contrast, views the proliferation of "junk" currencies as detrimental to world growth and certainly detrimental to small countries on flexible exchange rate regimes. Richard G. Harris, "Mundell and Friedman: four key disagreements", Policy Options, May 2001, p. 35. http://www.irpp.org/po/ ____________________________________________________________ Thought du jour To simplify severely, the Friedman view is typically American and the Mundell view typically Canadian. Friedman comes to the conclusion that both small and large countries can prosper under flexible exchange rates, and sees the proliferation of currencies and central banks as a natural and useful consequence of the growth in the number of nation states. Mundell, by contrast, views the proliferation of "junk" currencies as detrimental to world growth and certainly detrimental to small countries on flexible exchange rate regimes. Richard G. Harris, "Mundell and Friedman: four key disagreements", Policy Options, May 2001, p. 35. http://www.irpp.org/po/ ____________________________________________________________ Thought du jour Could we allow western companies to operate in poor countries but require them to operate to western standards of conditions and wages? This is tantamount to stopping them from operating at all (as the trade unionists who advocate such policies well know). And the effects of establishing rich enclaves in poor societies would be equivocal. Almost nothing is so destabilising and debilitating, both economically and politically, as the immediate juxtaposition of rich and poor. You see that when pursued by beggars as a tourist in a poor country, or in the illegal traffic in people from eastern Europe or across the Rio Grande. The best we can do in a hugely imperfect world is to encourage western companies to operate in poor countries and require them to operate not to the standards we would ourselves expect but to the best standards that exist locally - and use our economic pressure asss consumers and political pressure as voters to impose our will. John Kay, 'A poor view of poverty', Financial Times, 24 July 2001 ____________________________________________________________ Thought du jour [I]t is nonsensical to attack economic globalization as causing anti-social outcomes when the problem is that it passes some or several countries by and hence there is not enough of it! J. Bhagwati, "Thinking responsibly about social responsibility", February 2001. http://www.columbia.edu/~jb38/papers/link.pdf ____________________________________________________________ Thought du jour There has to be a legal system and a political order which enforce contracts, protect property rights, and provide for limited liability or the equivalent. In other words, there is no private property without good government. Until the disillusioning experience of post-Communist countries, such background considerations were regarded by many modern economists as too obvious or insufficiently mathematical to be worth discussing. Their neglect has made it all too easy for former Communist bosses to flip over to being Mafia- style capitalists instead. Samuel Brittan, _Essays, Moral, Political and Economic_, ch. 1. http://www.samuelbrittan.co.uk/pub2_p.html ____________________________________________________________ Thought du jour There are two sorts of wealth-getting ...; one is a part of household management, the other is retail trade: the former necessary and honorable, while that which consists in exchange is justly censured, for it is unnatural, and a mode by which men gain from one another. The most hated sort, and with the greatest reason, is usury, which makes a gain out of money itself, and not from the natural object of it. For money was intended to be used in exchange, but not to increase at interest. Aristotle, 350 B.C.E., Politics, Book One, Part X. Translated by Benjamin Jowett. http://socserv2.socsci.mcmaster.ca: 80/~econ/ugcm/3ll3/aristotle/Politics.pdf http://classics.mit.edu/Aristotle/politics.html ____________________________________________________________ Thought du jour "Elementary education by the state" is altogether objectionable. Defining by a general law the expenditures on the elementary schools, the qualifications of the teaching staff, the branches of instruction, etc., and ... supervising the fulfillment of these legal specifications by state inspectors, is a very different thing from appointing the state as the educator of the people! Government and church should rather be equally excluded from any influence on the school. Karl Marx, 1875, Critique.of.the.Gotha.Program. ____________________________________________________________ Thought du jour The premature deaths of smokers has economic benefits, according to a controversial report commissioned by a leading US cigarette manufacturer. The report, drawn up for tobacco giant Philip Morris Inc, found that the Czech Republic saved about $147m in 1997 through the deaths of smokers who would not live to use healthcare or housing for the elderly. [Philip Morris] produces 80% of the cigarettes smoked in the Czech Republic. BBC News Online, 17 July 2001. http: //news.bbc.co.uk/hi/english/world/americas/newsid_1442000/144 2555.stm ____________________________________________________________ Thought du jour How is it that a place like Hong Kong can have nearly the same average income per person as the United States? Surely it's not because of Hong Kong's plethora of resources? No, it's because government spending in Hong Kong has been about 10 or 15 percent of the national income. Now, under the new regime in Hong Kong, it's starting to go up. And Hong Kong is going to lose its vaunted productivity. It's the disparity in government spending between the United States and Hong Kong that explains how little Hong Kong can match the big United States in standards of living and growth. Milton Friedman, interviewed on 17 January 2001 by Peter Robinson. The Hoover Digest, 2001, No. 2, Spring Issue. http://www- hoover.stanford.edu/publications/digest/012/robinson.html [Guatemala's government spends less than 10 percent of national income. How is it that Guatemala is far below the US in standards of living and growth? -LW] ____________________________________________________________ Thought du jour The people who publish the UN Human Development Report complain every year that the world takes just one thing out of what they do -- the Human Development Index -- and ignores the rest. But what do they expect? They provide a horse race and a sermon and they're surprised when people focus on the horse race? .... But this year you may want to take in the sermon, too. The 2001 report is on technology, and it's not what you'd expect from the usually bolshie UN. The UN bureaucrats believe in progress, think things have generally gotten better over the past 30 years, figure that science and technology are the main reason why and are big fans of globalization. .... If you find that hard to believe, consider what the report says about ... coffee .... The report notes that "when coffee drinking in the 17th and 18th centuries began to threaten vested economic and political interests, fears about its health effects were stirred up to protect them." One French physician, doubtless with shares in a vineyard, suggested that "coffee dried up brain fluids, leading to exhaustion, impotence and paralysis." Johann Sebastian Bach (famous dead, white, European male) apparently composed his Kaffee-Kantate "partly as a protest against the movement to stop women from drinking it." The UN's message couldn't be clearer: Much of the current fuss about Frankenfoods is just self-interested twaddle. William Watson, 'UN weighs in on the side of progress', Financial Post, 17 July 2001. www.nationalpost.com ____________________________________________________________ Thought du jour It makes no sense to view globalisation as the reason why growth has not gone ahead faster in cases such as Cuba, North Korea, Afghanistan, Iran, Algeria, Nigeria, Somalia, Sierra Leone, Zimbabwe, Haiti, Venezuela or Papua New Guinea. All these obvious facts are played down or disregarded by the UNDP, as also by most commentators, because of the overpowering wish to portray non- beneficiaries as victims of the system. Again, the fact that over the past 20-25 years economic performance has been outstanding in China, largely because of market-oriented economic reforms, is likewise played down because it conflicts with the view that deliverance has to come from above. David Henderson, Anti-Liberalism 2000, Wincott Lecture, 28 September 2000. http://www.iea.org.uk/wpapers/wincott.htm ____________________________________________________________ Thought du jour Private versus public -- What does it mean? A [pension] system that is mandated is public -- by definition, whereas a private system is -- by definition -- voluntary. A publicly mandated system can be managed by the private sector .... It is the fact that a scheme is voluntary that entitles it to be labelled a private system. Marek Gora and Edward Palmer, Shifting perspectives in pensions, June 2001 (?), p. 13. http://www.case.com.pl ____________________________________________________________ Thought du jour Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. .... As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery. J.M. Keynes, 1919, The Economic Consequences of the Peace, chapter 6. posted at http://cepa.newschool.edu/het/ ____________________________________________________________ Thought du jour What an extraordinary episode in the economic progress of man that age was which came to an end in August 1914! The greater part of the population, it is true, worked hard and lived at a low standard of comfort, yet were, to all appearances, reasonably contented with this lot. But escape was possible, for any man of capacity or character at all exceeding the average, into the middle and upper classes, for whom life offered, at a low cost and with the least trouble, conveniences, comforts, and amenities beyond the compass of the richest and most powerful monarchs of other ages. The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantity as he might see fit, and reasonably expect their early delivery upon his doorstep; he could at the same moment and by the same means adventure his wealth in the natural resources and new enterprises of any quarter of the world, and share, without exertion or even trouble, in their prospective fruits and advantages; or he could decide to couple the security of his fortunes with the good faith of the townspeople of any substantial municipality in any continent that fancy or information might recommend. He could secure forthwith, if he wished it, cheap and comfortable means of transit to any country or climate without passport or other formality, could despatch his servant to the neighbouring office of a bank for such supply of the precious metals as might seem convenient, and could then proceed abroad to foreign quarters, without knowledge of their religion, language, or customs, bearing coined wealth upon his person, and would consider himself greatly aggrieved and much surprised at the least interference. But, most important of all, he regarded this state of affairs as normal, certain, and permanent, except in the direction of further improvement, and any deviation from it as aberrant, scandalous, and avoidable. J.M. Keynes, The Economic Consequences of the Peace, 1919, chapter 2. posted at http://cepa.newschool.edu/het/ ____________________________________________________________ Thought du jour The United Nations' human development report is known for preaching sermons about the injustice of poverty and offering solutions that advocate moving forward rapidly into the past. But this year it hits an important target. It should be mandatory reading for every self-appointed representative of "civil society" who rails against globalisation. The report scotches one of the protesters' favourite arguments: that the fruits of scientific and technological advances, such as genetically modified crops, are suspect and are foisted on defenceless countries by rapacious multinational companies. On the contrary, the authors say, bold innovation and freer technology flows are developing countries' salvation and they need more of them, not less. "Technology and poverty", Financial Times, 10 July 2001. ____________________________________________________________ Thought du jour [I]n his day, Mr [Michael] Manley commanded the sort of attention accorded to Lee Kuan Yew, another visionary politician from a small island. Sadly for Mr Manley, Jamaica, unlike Singapore, could not be held up as an example of a well-run and prospering nation. Not all of Jamaica's poverty was Mr Manley's fault. Oil prices jumped, sugar prices did not. But he deserved much of the blame. In 1980, at the end of Mr Manley's first eight years as prime minister, the tourist hotels were almost empty, and so were the supermarket shelves. Much of the middle class had moved to Miami or Toronto. Almost 900 people had been killed in the run-up to the election, partly as a result of warfare between gangs allied to political parties. "Michael Manley", The Economist, 13 March 1997. ____________________________________________________________ Thought du jour [T]he $1,000 bn spent on aid since the 1960s, with the efforts of advisers, foreign aid givers, the International Monetary Fund and the World Bank, have all failed to attain the desired results. .... [I]ndiscriminate donors and multilateral lenders ... created the myth of tough conditionality that developing world citizens blamed for their woes when in fact the bad old governments continued to ruin the economy. .... The failure is so widespread that ... the best the foreign aid community can do is to support genuine change on those precious occasions when it happens. William Easterly, "The failure of development", Financial Times, 4 July 2001. (Easterly is senior advisor of the World Bank's research department.) ____________________________________________________________ Thought du jour In Africa, improperly sterilised needles can make hospitals as risky as brothels. "Jabs for babies in hot poor places", The Economist, 28 April 2001, p. 64. ____________________________________________________________ Thought du jour for Fourth of July ... if the worry is the state's unfunded liabilities, why is the argument applied only to pensions? In all but the poorest countries, health care and education are largely publicly funded. Governments would not willingly renege on promises to care for the sick and to educate the country's children .... Such commitments are implicit debt in the same way as pensions, and their scale is not dissimilar, yet there is no discussion of pre-funding. Nicholas Barr, "Reforming pensions: myths, truths, and policy choices", IMF Working Paper 00/130, August 2000, p. 18. http://www.imf.org ____________________________________________________________ Thought du jour ... should all anticipated future needs be prefunded? I know that I will need to buy food for the rest of my life; but I do not accumulate a food fund, but intend to pay my grocery bills out of future earnings. The reason for making a pension accumulation is a different one--namely that I intend to retire, that is, to stop producing goods which I can exchange for other goods; no such accumulation is needed in a world without retirement, where people are immortal, or remain healthy and active in the labor force until their death. Such a world is mythical for the individual but is exactly the case for a country, which does not have to take action to anticipate a time when production will cease. The fact that countries are immortal is central: from an economic perspective, it makes pre-funding unnecessary unless it has a positive effect on output .... Nicholas Barr, "Reforming pensions: myths, truths, and policy choices", IMF Working Paper 00/130, August 2000, pp. 17-18. www.imf.org ____________________________________________________________ Thought du jour The three-day Aids conference at the United Nations in New York was evidence for many of why the UN should not be allowed to run the global fund being set up to fight the disease. ... The credibility the UN derives from its wide membership of countries was outweighed by the bureaucracy and infighting of its decision- making processes. "Aids delegates left frustrated", www.ft.com, 28 June 2001. Thought du jour -- a response You say the session "provided evidence for many of why the UN should not be allowed to run the global fund being set up to fight the disease". But the UN has never asked to do so. What Kofi Annan has proposed is an independent fund with a small governing body representing key donors and also the developing countries where the money is to be spent. Letter to the Editor from Edward Mortimer, Director of Communications, Executive Office of the Secretary-General, United Nations. FT, 29 June 2001. ____________________________________________________________ Thought du jour A defined-contribution [pension] scheme, in which a participant accumulates rights to the assets that he or she contributes, is probably the most efficient way of raising saving, since people regard their capitalised contributions as a part of their personal wealth. Report of the High-Level Panel on Financing for Development ('Zedillo Report'), 22 June 2001 http://www.un.org/reports/financing: Myth #1: Private defined benefit contribution plans raise national saving If individuals offset any contributions to the individual accounts through reduced saving in other forms, then total private saving is unaffected by the accounts. It is entirely possible that ... a shift to individual accounts would not raise national saving. "Rethinking Pension Reform: Ten Myths About Social Security Systems" by P.R. Orszag and J.E. Stiglitz, September 1999, pp. 9, 11. Thought du jour: addendum on pensions and saving Apologies for citing myself, but this is a paragraph from my very first paper on pensions, which goes to the heart of this question: "For national saving to increase, someone's consumption must fall. The government can finance its [current] pensions with taxes, for example, thus causing the general public to reduce consumption; or it can pay lower pensions, thereby causing retirees to reduce their consumption. But governments can achieve this same result with tighter fiscal policy or conventional public pension reform, with no need to privatise social security! The desire to increase national savings is a poor reason to privatise social security unless, of course, tight fiscal policy is somehow more acceptable when it is implemented along with privatised and funded pensions." L. Willmore, "Social security and the provision of retirement income", Discussion Paper PI-9805, The Pensions Institute, University of London, February 1998, p. 12. http://netec.mcc.ac.uk/WoPEc/data/Papers/bbkbbkpip9805.html ____________________________________________________________ Thought du jour A defined-contribution scheme, in which a participant accumulates rights to the assets that he or she contributes, is probably the most efficient way of raising saving, since people regard their capitalised contributions as a part of their personal wealth. Report of the High-Level Panel on Financing for Development ('Zedillo Report'), 22 June 2001 http://www.un.org/reports/financing: Myth #1: Private defined benefit contribution plans raise national saving If individuals offset any contributions to the individual accounts through reduced saving in other forms, then total private saving is unaffected by the accounts. It is entirely possible that ... a shift to individual accounts would not raise national saving. "Rethinking Pension Reform: Ten Myths About Social Security Systems" by P.R. Orszag and J.E. Stiglitz, September 1999, pp. 9, 11. ____________________________________________________________ Thought du jour In a Malthusian world of slow technological advance living standards themselves reveal nothing about an economy's level of technology, or its direction. Thus, the Europeans who visited Tahiti in the eighteenth century were astonished by two things (in addition to the Islands' sexual mores) -- the stone-age technology of the inhabitants, who so prized iron that they would trade a pig for one nail, and the ease and abundance in which they were living. But ... Tahiti was not a candidate for an Industrial Revolution, no matter how well fed its inhabitants. Gregory Clark and Robert Feenstra, "Technology in the Great Divergence", April 2001. http://www.nber.org ____________________________________________________________ Thought du jour There are some over-the-top economic pundits who believe that globalised markets will not allow fiscal correctives. But where is the evidence? Globalisation is too often invoked on all sides of the political spectrum as an excuse for not putting one's hands into one's own pockets to help the poor or the victims of change. It is true that in a globalised world it is difficult to tax effectively mobile factors of production. But ... most workers are not that mobile. Another non-mobile factor of production is land, which classical economists have wanted to tax from Ricardo onwards. Samuel Brittan: A bishop takes on the global market place, Financial Times 23/12/99 http://www.samuelbrittan.co.uk/text24_p.html ____________________________________________________________ Thought du jour Ideology has infused economics, for the first time since Karl Marx wrote (and nobody read) "Das Kapital". The dismal science is suddenly sexy. ... The protesters ... have done what the public relations departments of the WTO, the IMF, the World Bank and the EU have failed to do in half a century: they have made economics exciting. "More tomatoes, please", The Economist, 23 June 2001, p. 13 ____________________________________________________________ Thought du jour When a tax is laid upon commodities, which are consumed by the common people, the necessary consequence may seem to be, either that the poor must retrench something from their way of living, or raise their wages, so as to make the burden of the tax fall entirely upon the rich. But there is a third consequence, which often follows upon taxes, namely, that the poor encrease their industry, perform more work, and live as well as before, without demanding more for their labour. David Hume, _Essays: Moral, Political, and Literary_,1752, II.VIII.2. ____________________________________________________________ Thought du jour Where the riches are engrossed by a few, these must contribute very largely to the supplying of the public necessities. But when the riches are dispersed among multitudes, the burthen feels light on every shoulder, and the taxes make not a very sensible difference on any one's way of living. Add to this, that, where the riches are in few hands, these must enjoy all the power, and will readily conspire to lay the whole burthen on the poor, and oppress them still farther, to the discouragement of all industry. David Hume, _Essays: Moral, Political, and Literary_,1752, II.I.17 and 18. ____________________________________________________________ Thought du jour Economists have their own ethical bias. They are trained to ask when told that something is good or bad: "Good or bad compared to what?" Notions of marginalism and trade-offs count against absolutist formulations, for instance that some particular good or particular virtue has unquestionable priority and must be served at all costs. Samuel Brittan, "Happiness first", Times Literary Supplement, 01/06/01 http://www.samuelbrittan.co.uk/text79_p.html ____________________________________________________________ Thought du jour A global regime that generates universally high prices for drugs to combat general diseases, along with little investment in development of drugs for diseases specific to the poor, is unacceptable. What is needed, instead, is price differentials for drugs to combat general diseases together with incentives to the private sector for development of drugs for specific illnesses. Martin Wolf, "The true price of saving lives", www.FT.com, 19 June 2001. ____________________________________________________________ Thought du jour [W]hile nationalist leaders in today's aspiring nation states, such as Scotland and Quebec, speak of a free-trading future, in the early 20th century independence was typically costly from an economic standpoint, involving the adoption of protectionist policies. [T]he consensus is that the world is becoming more open; for example, according to Sachs and Warner all regions have become more open in recent decades. However, Africa still lags well behind the rest of the world: as late as 1992, only 30% of African countries were judged open by Sachs and Warner, as compared with 86% of countries in the Latin American and Caribbean region, and 67% of Asian countries. R. Findlay and K.H. O'Rourke, "Commodity market integration, 1500-2000", unpublished paper, April 2001, pp. 28 and 34-35. www.nber.org ____________________________________________________________ Thought du jour [Al] Gore's friends and former aides say [Bill] Clinton ruined Gore's shot at the presidency by having sexual relations with that woman, Miss Lewinsky. Clinton's friends and former aides reply that Gore blew the election by running away from Clinton's record of prosperity. Let's settle this. They're both right. Gore would have won if Clinton had kept his pants on. And if Clinton, after dropping his pants, had been put up as the candidate, he would have won anyway. William Saletan, SLATE POLITICS,"Clinton, Gore, and Darwin", June 14, 2001. www.slate.com ____________________________________________________________ Thought du jour With the injustices of men, as with the convulsions and disasters of nature, the longer they remain unrepaired, the greater become the obstacles to repairing them J.S. Mill, Principles of Political Economy, Book II, Chapter II.2.4 ____________________________________________________________ Thought du jour [T]he pioneers in each of these traditions [--classical, Marxian, neo-classical and Keynesian--] shared a distinguished attribute. All of them took up their pens in a mood critical of established institutions or patterns of thought. If some of their doctrines were later appropriated to justify the status quo, such complacency was alien to the innovators. It was this grand tradition that Keynes had in mind when he once described economics as a 'dangerous science'. William J. Barber, A History of Economic Thought (Penguin Books, 1967), p. 259. ____________________________________________________________ Thought du jour A striking fact ... is that the standing of old age has been markedly lowered since the notion of experience has been discredited. Modern technocratic society thinks that knowledge does not accumulate with the years, but grows out of date. Simone de Beauvoir, writing in 1968! (La Vieilless, _Old Age_ , translated by Patrick O'Brian, Cox & Wyman Ltd., London, 1972, p. 210) ____________________________________________________________ Thought du jour From the Colombian point of view [legalisation] is the easiest solution. I mean, just legalise it and we won't have any more problems. Probably in five years we wouldn't even have guerrillas. No problems. We [would] have a great country with no problems. Jaime Ruiz (Senior Advisor to the President of Colombia), Ottawa Citizen, 6 September 2000. Legalizing drugs would simultaneously reduce the amount of crime and raise the quality of law enforcement. Can you conceive of any other measure that would accomplish so much to promote law and order? Milton Friedman, Newsweek, 1 May 1972. ____________________________________________________________ Thought du jour America rightly thinks of itself as a country conceived in liberty. But it is also a country that was conceived by puritans. Again and again, these days, puritanism seems to be trumping freedom. No country treats smokers (or indeed tobacco companies) with such petty vindictiveness as the United States. ... And where else would photocopier toner come in packets that warn you not to eat the contents? "Free Jenna Bush!", The Economist print edition, 7 June 2001. ____________________________________________________________ Thought du jour There is a big difference between a country that is open because of its own internal nature and a country that has been induced to become open by economic argument and IMF decree. A generation ago, "openness" was also a sign that a country's government was relatively competent. Perhaps the real strong association is between the general quality of government policy and growth. "Openness" and Growth, J. Bradford DeLong, May 2001. http://econ161.berkeley.edu/TotW/g27.html ____________________________________________________________ Thought du jour " One way of looking at globalisation is that it is an excuse. On the left it is used as an excuse by governments that have not tried to introduce socialism. "What can we do?" is the cry. "We will be swept away by the world capital markets if we try anything really radical." On the right, globalisation is used as a threat. Instead of arguing against excessive levels of government spending on the merits of the case, people are told that their economies will become "uncompetitive". Samuel Brittan, "The excuse of globalisation", www.FT.com, 9 May 2001. ____________________________________________________________ Thought du jour [Globalisation] has caused many public goods and services, where were traditionally national in scope, to become international: such public goods or services as narcotics control, disease management, clean air, law and order, peace and security _and financial stability_ can no longer be provided through domestic policy action alone. [Emphasis added.] Report of the Secretary General to the Preparatory Committee for the High-level International Intergovernmental Event on Financing for Development, 18 December 2000, p. 39, paragraph 105. http://www.un.org/esa/ffd. ____________________________________________________________ Thought du jour One of the greatest misunderstandings in the current discussion and perhaps the area of greatest potential mischief is the argument of the so-called "worker rights" movement that globalization results in exploitation of workers in developing countries. I find it curious that there is no discussion of the alternatives that would face workers in these countries if the factories, which have to pay wages that are competitive in the local market, were not being built in the first place. Robert Sheehy, Interview published in the University of Oregon Economics Department Newsletter, Number 22 - Fall 2000. http://www.uoregon.edu/~econ/Alum/Newsletter2000.pdf ____________________________________________________________ Thought du jour [G]lobalization has brought worker exploitation and economic instability to many countries, Amnesty said, noting that more than 80 nations had a lower per capita income in 2000 than they had in 1999. But the effects of globalization haven't been all bad, Amnesty said. The group applauded the birth of a new network of protest movements that use the Internet and other new technologies. "Amnesty Annual Report Focuses on Globalization", by THE ASSOCIATED PRESS, www.nytimes.com, 30 May 2001. ____________________________________________________________ Thought du jour Britain would have her reasons for abandoning the pound. Pursuing the European experiment, a political enterprise aimed at permanently pacifying history's least pacific continent, is an important part of it. Canada would face a different matrix of benefits and costs. We haven't fought a North American war in going on 200 years. William Watson, "Blair win could doom the loonie", National Post, 26 May 2001. ____________________________________________________________ Thought du jour On tax cuts, Mr Bush ... held firm for his original demands until the very last moment. On education, he compromised from the first. ... He signalled that vouchers would be surrendered without a fight. ... Which all makes good tactical sense. The harsh truth is that most Republican parents are fairly content with their local schools. And the inner-city populations that have most to gain from educational reform are glued to the Democratic Party.. Lexington: A tale of two dynasties, The Economist, 12 May 2001, p. 40. ____________________________________________________________ Thought du jour All special advisers to underdeveloped countries who have taken the time and trouble to acquaint themselves with the problems, no matter who they are ... all recommend central planning as the first condition of progress. Gunnar Myrdal, An International Economy (New York: Harper and Brothers, 1956), p. 201. ____________________________________________________________ Thought du jour Hayek's libertarianism was not based on the notion of natural rights, or the idea (frequently associated with Ayn Rand) that humankind is too grand to live in chains. Rather, Hayek asserted that freedom had to proceed from a recognition of humanity's inherent limitations -- particularly the limits of reason and knowledge. No planner could possibly have command of the numberless bits of localized and individual information needed to plan effectively. Only the unorganized price system in a free market enabled order to arise from millions of individuals' personal plans. To Hayek, civilization's greatest achievements -- language, law, the market economy -- were the result of spontaneous orders, not top-down planning. Brian Doherty, "Free Market Guru", Washington Post Book World, Sunday, 6 May 2001, page BW04. ____________________________________________________________ Thought du jour Nobody has yet come up with any technology -- nor is it on the horizon -- which could possibly replace authors as the producers of fiction.Nor has anyone suggested that there is any likelihood of the market for that product drying up. The only issue, therefore, is simply the means by which authors get paid for their work. That's a different kettle of fish entirely from a "threat" to the livelihood of authors. Some writers out there, imitating Chicken Little, seem to think they are on the verge of suffering the fate of buggy whip makers. But that analogy is ridiculous. Buggy whip makers went out of business because someone else invented something which eliminated the demand for buggy whips -- not because Henry Ford figured out a way to steal the payroll of the buggy whip factory. Eric Flint, "Introducing the Baen Free Library" http://www.baen.com/library/home.htm ____________________________________________________________ Thought du jour The role of well run companies is to make profits, not save the planet. Let them not make the error of confusing the two. Martin Wolf, www.FT.com, 16 May 2001. ____________________________________________________________ Thought du jour I don't expect that mutual recognition of each other's blind spot about government will cause protestors and free-traders to sit down together over lattes and pepper steak in Quebec City. But as we condemn the protestors' views on trade and worry about possible violence, we should understand that what motivates them is mistrust of government. People who mistrust government can't be all bad. William Watson, "When bad governments do good things", National Post, 18 April 2001 ____________________________________________________________ Thought du jour Economic liberalism and other forms of liberalism should be tied together. You get, on the one hand, so-called liberals, who are mostly interested in equality, and who do not see that the liberty to change your money into a foreign currency, to start a business, to go where you like, even to determine how to spend your income, are important liberties. On the other hand, you get so-called economic liberals, who draw up tables of economic freedom, in which South East Asian dictatorships become tolerable. They are both in danger of making themselves absurd; these views are not convincing if held in isolation. Samuel Brittan, in Rethinking British Decline (edited by Richard English and Michael Kenny), Macmillan, London, 1999. http://www.samuelbrittan.co.uk/inter2_p.html ____________________________________________________________ Thought du jour To an increasing extent, humans can now achieve a new form of economic organization where the most important input of production is no longer machines, but human knowledge. Instead of burning fossil fuels to power machines, we burn information to power knowledge. Information is a much cleaner fuel than coal and petroleum, and one that puts humans rather than machines at the centre of economic progress. I propose that economic progress be knowledge- intensive rather than resource-intensive; more could be achieved with less. Graciela Chichnilnisky, "Development and Global Finance: The Case for an International Bank for Environmental Settlements, " ODS Discussion Paper 10, UNDP, New York, 1997, p. 2. ____________________________________________________________ Thought du jour ... those economists who have hoped to appropriate the rhetoric of competitiveness for good economic policies have instead had their own credibility appropriated on behalf of bad ideas. And somebody has to point out when the emperor's intellectual wardrobe isn't all he thinks it is. So let's start telling the truth: competitiveness is a meaningless word when applied to national economies. And the obsession with competitiveness is both wrong and dangerous. Paul Krugman, "Competitiveness: A dangerous obsession", Foreign Affairs (Mar/Apr 1994). ____________________________________________________________ Thought du jour Paradoxically, in much of Europe the collapse of communism has liberated the centre-left and damaged the centre-right. The left has split into a social democratic majority and an infantile leftist minority. The former has been able to abandon full-blooded socialism, while the latter, no longer obliged to defend actual anticapitalist societies, feels free to indulge in its traditional blend of fantasy with fury. Martin Wolf, www.FT.com, 13 May 2001. ____________________________________________________________ Thought du jour History repeats itself first as tragedy and then as farce. There is something more like tragic myopia than farce in [Japan's new prime minister] Mr Koizumi's fixation on supply- side restructuring and revitalisation, when plainly Japan's problem is one of demand deficiency. That problem can only be exacerbated by loan fore-closures, bankruptcies, unemployment, further erosion of land prices and further restriction of credit for the small businessman who has only land to offer as collateral. Ronald Dore, "Japan's history of oversight", www.FT.com, 13 May 2001. ____________________________________________________________ Thought du jour At a conference last week I heard paeans to the superiority of traditional rural lifestyles over modern, urban life -- a claim that not only flies in the face of the clear fact that many peasants flee to urban jobs as soon as they can, but that (it seems to me) has a disagreeable element of cultural condescension, especially given the overwhelming preponderance of white faces in the crowds of demonstrators. (Would you want to live in a pre-industrial village?) I also heard claims that rural poverty in the third world is mainly the fault of multinational corporations -- which is just plain wrong, but is a convenient belief if you want to think of globalization as an unmitigated evil. The most sophisticated answer was that the movement doesn't want to stop exports -- it just wants better working conditions and higher wages. But it's not a serious position. Third-world countries desperately need their export industries -- they cannot retreat to an imaginary rural Arcadia. They can't have those export industries unless they are allowed to sell goods produced under conditions that Westerners find appalling, by workers who receive very low wages. And that's a fact the anti- globalization activists refuse to accept. Paul Krugman, NY Times, 22 April 2001 ____________________________________________________________ Thought du jour [Social policies] need to be argued on their own terms and not because of fear that Europe will become "uncompetitive". It is companies that become uncompetitive. Countries or regions can be uncompetitive only if their real exchange rates are too high, a disequilibrium which is often self- correcting. The so-called globalised economy is mainly a return to the conditions that existed before the first world war. At that time trade was roughly similar to today as a proportion of the national income and capital flows between countries were at least as large. Even so, it is still something to celebrate. After nearly a century of wars, crises and controls, the world economy has recovered some of its earlier freedom. Samuel Brittan, "The excuse of globalisation", Financial Times, 9 May 2001. ____________________________________________________________ Thought du jour I read last year ... Jered Diamond's Guns, Germs and Steel: A Short History of Everybody for the Last 13,000 Years. Diamond is, of all things not qualifying one to write the economic history of the world since the last Ice Age, a professor of physiology at a medical school. He's an evolutionary biologist, trained as (of all things) a botanist. The economic historian Joel Mokyr told me that he approached Diamond's book on page 1 the same way I did: 'Who's this fool? He's claiming to talk about economic history. I'm the expert in economic history around here." Joel says that by page 50 he was converted. It took me only 20 pages, which just shows that Joel has higher intellectual standards than I do. Deirdre McCloskey, "Books of Oomph", post-autistic economics newsletter, Issue no. 6; 8 May 2001. www.paecon.net ____________________________________________________________ Thought du jour Chatterbox must admit [that] he was stirred by U.S. News' most memorable testimonial (for Andover): "[He] was a 15-year-old sophomore when he arrived from Texas. He knew at once that his academic background was not as strong as most of his classmates'. For a time, [he] feared he would flunk out, and he was never more than a middling student. He played varsity basketball and baseball but was never a star. Still, he was a big man on campus thanks to his irrepressible personality, cocksure manner, and love of the limelight. [He] was a member of his class rock-and-roll band, not for singing or playing an instrument, but merely for clapping. He was also High Commissioner of Stickball, managing to organize a league of campus teams open to even the most uncoordinated boys. 'Andover,' he says, 'was a life- changing experience.'" It was at boarding school, apparently, that George W. Bush learned to disdain the kids who hit the books too hard (or applied themselves too vigorously to any other pursuit). Were he at all self-conscious about his own fecklessness, Bush might not inhabit the White House today. Timothy Noah, "Chatterbox: News You Can't Use", www.slate.com,8 May 2001. ____________________________________________________________ Thought du jour NGOs [non-governmental organisations] are, more and more, performing part of the functions traditionally performed by governments (viz. representing people's interests). There should be an appropriate way for tax payers to have the option of paying a certain amount of their taxes directly to CSOs [civil society organisations] of their choice (i.e. to deduct CSO contributions up to a certain overall amount from their tax payments to governments). This issue should form an integral part of the new financial architecture to be built. Inge Kaul, Talking points for the seminar on Global Finance and Society, New York, 3 April 2001. Ms. Kaul is Director, Office of Development Studies, UNDP, New York. The views expressed are personal. [Should a US citizen be allowed to direct part of his tax money to the religious group of his choice? to the ACLU? to the NRA? to the KKK? Such groups do represent the interests of some members of American society.--LW] ____________________________________________________________ Thought du jour The historical examples of confederation are not encouraging. They include the Confederation of American States, which gave way to the USA in 1788, and the 19th century German Confederation, largely ineffectual until it was replaced by a united Germany based on Prussian hegemony. About its only achievement was a writ for the arrest of the composer Richard Wagner, who had to take refuge in Switzerland. Samuel Brittan, "The greatest perversity of the European Union", Financial Times, 25 April 2001. ____________________________________________________________ Thought du jour I reject the whole notion of competitiveness. We cannot all be more competitive. I remember somebody saying: "Whom should the whole world be more competitive against?" We can all perform better, we can all be better off. We cannot all be more competitive. "Competitive" is a comparative notion. If you restrict it to a very boring macro-economic sense, each country needs to have a real exchange rate that is competitive enough not to have a current payments deficit greater than what can be met from long-term foreign capital imports. But the fixation upon competitiveness is not merely a mistake, it is harmful because it makes trade into a form of war. Samuel Brittan, in Rethinking British Decline (edited by Richard English and Michael Kenny), Macmillan, London, 1999. http://www.samuelbrittan.co.uk/inter2_p.html ____________________________________________________________ Thought du jour Those who operate the present system [of allocation of spectrum] do not believe that the blind forces of a market could possibly take into account of all the complex considerations they now weigh. The people who raise such objections, not being economists, only dimly realise that markets are not necessarily all alike .... The spectrum market would most resemble the real estate market with its zoning, rights of way, rights of neighbours, and building codes. Yet a real estate market gives consumers far more freedom than a system in which housing is built and allocated by the state. Ithiel de Sola Pool, _Technologies without Boundaries_ (Harvard University Press, 1990), p. 45. ____________________________________________________________ Thought du jour The essence of a free press is the principled, reasonable, moral essence of freedom. The character of a censored press is the unprincipled aberration of unfreedom, it is a civilized abomination, a perfumed monster....A censored press has a demoralizing effect....The government only hears its own voice, it knows that it only hears its own voice, yet it persists in the delusion that it hears the voice of the people and in turn demands of the people that they should persist in this delusion. Karl Marx, 'Debatte uber die Pressefreiheit,' Rheinische Zeitung, May 5, 1842. ____________________________________________________________ Thought du jour The dilemma of a socialized system is that the information flow overwhelms a centralized system if it is open to new ideas and data, that closing the system and forcing the plan to work forecloses alternatives and risks unhedged mistakes, and that decentralizing without real markets poses the problems discussed by Hayek. These information problems permeate virtually all economic processes. Richard Nelson & Sidney Winter, *An Evolutionary Theory of Economic Change*, Harvard U. Press, 1982, p. 365. ____________________________________________________________ Thought du jour Don't anthropomorphize computers. They don't like it. Anonymous. ____________________________________________________________ Thought du jour Economists have become so impressed with what mathematics has done for physicists that they spend much of their time building big mathematical models and worrying about their rigor. This work usually proves fruitless, because they're allowed to sit down in an armchair and put any kind of crazy assumptions they want into those models. Herbert A. Simon, Interviewed June 1994 by Doug Stewart http://www.omnimag.com/archives/interviews/simon.html ____________________________________________________________ Thought du jour The antihistorical school, which is now so common in the United States, where the history of economic thought is regarded as slightly depraved entertainment, fit only for people who really like medieval Latin, so that one became a full-fledged, charter PhD economist without ever reading anything that was published more than ten years ago ... leads to the development of slick technicians who know how to use computers, run massive correlations and regressions but who do not really know which side of anybody's bread is buttered, who are incredibly ignorant of economic institutions, who have no sense at all of the blood, sweat and tears that have gone into the making of economics and very little sense of any reality which lies beyond their data. Kenneth E. Boulding, "After Samuelson, who needs Adam Smith? " History of Political Economy 3:2 (1971), pp. 232-233. [Boulding's complaint was about economics thirty years ago! What would he say today? --LW] ____________________________________________________________ Thought du jour Many people believe that giving poor people greater access to the Internet will help alleviate their poverty. But this is not necessarily true. If you were to research car ownership, you would probably find that a far higher proportion of investment bankers than unemployed people drive luxury cars. Yet although most unemployed people would be very happy to receive a free BMW from the taxpayer, it is not clear that receiving one would increase their chances of getting a job. Tim Jackson, "The dubious divide", 19 March 2001. www.ft.com ____________________________________________________________ Thought du jour The Internet was supposed to remove all barriers to entry, encourage competition and create a frictionless market with unlimited access to free content. But, at the same time, it was supposed to offer hugely profitable investment opportunities. You do not have to have a Ph.D. in economics to see that both arguments are rarely true at the same time. Hal Varian, "Economic Scene: Comparing Nasdaq and Tulips Unfair to Flowers", New York Times, 8 February 2001. ____________________________________________________________ Thought du jour The worry about ageing is, in short, much ado about rather little, except perhaps in those countries forecast to experience particularly steep population declines, such as Japan and Italy. Economists should stop being so dismal. All it will take is a little imagination and courage for most of today's rich countries to enjoy their escape from the age- old tyranny of early death. Martin Wolf, writing in the Financial Times, 6 February 2001. ____________________________________________________________ Thought du jour If we have thought about it, we have given thanks that we have been spared the burden of living in the Age of the Protestant Reformation. But now we fear that we have been doomed, instead, to live in the Age of the Islamic Reformation. The parallels are striking: a dominant clergy and aristocracy that seem to have lost their way and succumbed to materialism; a rising literate middle class; the mass distribution of personal copies of the Holy Book so that people can read it and think for themselves; and then terror, as those who have convinced themselves that they bear the will of God take action, and people fight and die. In Europe it lasted for more than 120 years--with one third of the population of Germany dying in the 30 Years War-- before nearly everyone learned that reading ones private copy of the Holy Book did not make one the vessel of the will of God, and that waging Holy War was not a way to save the souls of others, but a way to lose ones own. J. Bradford DeLong "Dealing with the Islamic Reformation: Parallels Between Today and the Sixteenth Century", October 2001. http://econ161.berkeley.edu/TotW/Islamic_reformation.html