Quotulatiousness

January 25, 2024

QotD: How Meritocracy morphed into “Meritocracy”

Filed under: Books, Economics, Education, Quotations, USA — Tags: , , , , — Nicholas @ 01:00

The current meritocratic system began as an effort to open up a hereditary WASP elite to outsiders — and for a while, as immigrants, minorities, and women earned their way into America’s legacy campuses, writes Markovits, it looked like it was working more or less as intended. In the last few decades, however, the system has morphed into a do-or-die tournament for the prize of an Ivy League degree and a bonus-rich job at a swanky address. Instead of being democracies of talent, Harvard and Yale and their elite cronies are now quasi-exclusive clubs for the children of wealth. Money gives rich parents the means to groom their kids for these clubs as early as infancy with classes, books, and trips to museums meant to enhance kids’ development. They move to wealthy neighborhoods, where schools offer a vast array of (ahem) “enrichment” activities, including test prep and college-essay tutoring. Alternatively, they put their kids through 12 years of $40,000-a-year-plus private schools, whose administrators just happen to be chummy with Princeton admission officers.

Their efforts pay off for their progeny, but in the harsh competition that is the contemporary economy, they leave everyone else in the dust. Nourished in the hothouse of elite homes and communities, rich children have pulled away from their middle-class counterparts when it comes to academic performance, outscoring them on the SAT by twice as much as middle-class kids outscore poor students. The most elite colleges enroll more students from households in the top 1 percent than from the entire bottom half of the income scale. Those students are first in the pipeline to elite jobs. Top banks go only to the Ivy League, MIT, and Stanford for their recruiting. Top Five law schools are the training grounds for partners at the poshest firms. Meantime, middle-class kids are not only a rare sight on elite campuses; they’re also far less likely to get any college degree. Poor kids do worse still.

The result, says Markovits, is precisely the sort of dynastic elite that the putatively unbiased SAT was supposed to put out of business. To the dismay of his critics on the left, Markovits is not entirely unsympathetic to the winners of the tournament. The rich used to be indolent, he reminds us. The whole point of wealth was to be freed from toil, while peasants sweated in fields and manor kitchens to serve their betters and eke out a living for their undernourished families. These days, by contrast, the rich work 16-hour days and weekends under immense competitive pressure to close the deal, make partner, and take a conference call with Japanese businessmen. “No prior elite has ever been as capable or as industrious as the meritocratic elite that such training produces. None comes close,” Markovits asserts. Yes, a few actresses and real estate barons try to bribe and cheat their children into the palaces of learning, but most Ivy Leaguers have used their privileged upbringing to make their way into these bastions according to the rules of achievement. Given the expensive grooming required to make it to the top campuses, he implies, a squeaky-clean meritocracy would still favor the rich.

Kay S. Hymowitz, “Meritocrats versus Meritocracy”, City Journal, 2019-10-11.

January 20, 2024

The British Empire would have failed a proper cost-benefit analysis

Filed under: Africa, Asia, Britain, Economics, History, India — Tags: , , , , — Nicholas @ 05:00

At the Institute of Economic Affairs, Kristian Niemietz is working on a paper on the economics of empire that, as he shows in this article, indicates that the empire was never a winning economic proposition for Britain as a whole, no matter how well certain well-connected individuals and companies benefitted:

The British Empire in 1914 (via antiquaprintgallery.com)

But is it actually true that imperialism makes countries richer? Does imperialism make economic sense?

This question was already hotly debated at the heyday of imperialism. Adam Smith believed that the British Empire would not pass a cost-benefit test:

    The pretended purpose of it was to encourage the manufactures, and to increase the commerce of Great Britain. But its real effect has been to raise the rate of mercantile profit, and to enable our merchants to turn into a branch of trade, of which the returns are more slow and distant than those of the greater part of other trades, a greater proportion of their capital than they otherwise would have done […]

    Great Britain derives nothing but loss from the dominion which she assumes over her colonies.

He believed that Britain would be better off if it dissolved its Empire:

    Great Britain would not only be immediately freed from the whole annual expense of the peace establishment of the colonies, but might settle with them such a treaty of commerce as would effectually secure to her a free trade, more advantageous to the great body of the people, though less so to the merchants, than the monopoly which she at present enjoys.

The liberal free-trade campaigner Richard Cobden agreed:

    [O]ur naval force, on the West India station […], amounted to 29 vessels, carrying 474 guns, to protect a commerce just exceeding two millions per annum. This is not all. A considerable military force is kept up in those islands […]

    Add to which, our civil expenditure, and the charges at the Colonial Office […]; and we find […] that our whole expenditure, in governing and protecting the trade of those islands, exceeds, considerably, the total amount of their imports of our produce and manufactures.

If imperialism was a loss-making activity – why did Britain and other European colonial empires engage in it for so long?

Smith and Cobden explained it in terms of clientele politics (or Public Choice Economics, as we would say today). Somebody obviously benefited, even if the nation as a whole did not. And the beneficiaries were politically better organised than those who footed the bill.

This proto-Public Choice case against imperialism was not limited to political liberals. Otto von Bismarck, the Minister President of Prussia and future Chancellor of the German Empire, hated liberals in the Smith-Cobden tradition, but he rejected colonialism in terms that almost make him sound like one of them:

    The supposed benefits of colonies for the trade and industry of the mother country are, for the most part, illusory. The costs involved in founding, supporting and especially maintaining colonies […] very often exceed the benefits that the mother country derives from them, quite apart from the fact that it is difficult to justify imposing a considerable tax burden on the whole nation for the benefit of individual branches of trade and industry [translation mine].

In his writing about the economics of imperialism, even Michael Parenti, a Marxist-Leninist political scientist (who is, for obvious reasons, popular among Twitter hipsters), sounds almost like a Public Choice economist:

    [E]mpires are not losing propositions for everyone. […] [T]he people who reap the benefits are not the same ones who foot the bill. […]

    The transnationals monopolize the private returns of empire while carrying little, if any, of the public cost. The expenditures needed […] are paid […] by the taxpayers.

    So it was with the British empire in India, the costs of which […] far exceeded what came back into the British treasury. […]

    [T]here is nothing irrational about spending three dollars of public money to protect one dollar of private investment – at least not from the perspective of the investors.”

This leads us to a curious situation. Today’s woke progressives disagree with their comrade Parenti on the economics of empire, but they do agree with Britain’s old imperialists, who argued that the Empire was vital for Britain’s prosperity.

January 19, 2024

Canada “as a white supremacist genocidal settler state” also somehow has an immigration problem

In The Line, Jen Gerson documents what she characterizes as a collapse of the pro-immigration consensus that has been a major part of Canadian political affairs for generations:

A billboard in Toronto in 2019, showing Maxime Bernier and an official-looking PPC message.
Photo from The Province.

Canada created a durable and lasting consensus on immigration by leaning on a shared national mythology: that from a colonial past, we forged a principled multicultural nation in which people from around the world are able to honour their heritage and traditions while building a prosperous and successful life for themselves and their descendants. This narrative requires that all of us — regardless of our divergent ideologies or religious views — cohere around a shared set of post-enlightenment principles: the equality of man, the rule of law, tolerance, and the rest. We take this highly abstract concept of nationhood so for granted that we’ve forgotten how historically rare it is.

This is not to say Canada ever imagined itself to have an unblemished history, but rather that this is a nation that saw itself as a fundamentally good and noble project, and therefore some place worth immigrating to, and a culture worth integrating with.

The last nine years of Liberal government have undermined that vision. Under the Trudeau Liberals, instead what we have been regularly subjected to Canada as a white supremacist genocidal settler state. And, hey, to what extent that historical reckoning is good or necessary is not for me to say: but if “Canada is bad, actually” is the starting position, by what delusion do any of us presume to perpetuate it?

A post-modern nation state that has no sense of itself, and no belief in its own inherent value, is not an experiment worth continuing, now is it? How do we expect to welcome and integrate 500,000 new Canadians annually into a corrupt national project? If “Canadian” isn’t something worth being, why should anyone sublimate their ethnic or religious grievances into this vicious national identity?

I think this is the tension that lies at the heart of this growing unease around immigration, and it’s going to be the most difficult one for the Conservatives to navigate. There will be those within the party that follow this thread directly into white grievance and conspiracies like great replacement theory, the xenophobic fear that “elites” are trying to demographically and culturally replace white people through mass migration.

I think that theory is insane, to be clear, but I’m also noticing it wend its way into politics in weird and destructive ways.

A small example: before the holidays, certain conservative social media circles were put into a state of high uproar over the construction of a 55-foot statue of the Hindu deity Hanuman on a private temple complex in Brampton.

Initially, I was baffled and confused and even a bit amused by the upset. After all, this wasn’t a publicly funded monument. It was on private property, and isn’t respect for private property a sacrosanct value for conservatives? This wasn’t rational.

The controversy was only explicable when we examine the emotional subtext of the complaints: that there was something deeply menacing about Hanuman to these people. They saw him overlooking the suburbs of Brampton with a colonial intent. (Irony abounds!) One of the most telling tweets came from one angry individual who said something to the effect: “They tore down our John A. Macdonald statues, but, sure, Hanuman is great.”

To this gentleman: the fine devout Hindus of Brampton did not tear down your John A. Macdonald statues — and I highly doubt they would any pick bones with historic or civic monuments.

We, Canadians, tore down our own statues (or allowed them to be torn down) as part of an internal process of historical reckoning. Again, immigrants are not doing anything to Canada. They are Canada, and as such, they share in this country’s problems, which are largely self created.

January 15, 2024

The radical anti-state agenda of Argentina’s Javier Milei

Filed under: Americas, Economics, Liberty, Media, Politics — Tags: , , , — Nicholas @ 04:00

Jon Miltimore compares the Venezuelan experience after electing Hugo Chavez in 2007 to Argentina’s radically opposed choice to elect Javier Milei as President late in 2023:

Javier Milei, 8 October 2022.
Photo attributed to Vox España via Wikimedia Commons.

In November, the country elected libertarian Javier Milei as its new president. And whereas Hugo Chavez said, “All that was privatized, let it be nationalized”, Milei is essentially saying the opposite: All that was nationalized, let it be privatized.

Milei started by cutting in half the number of federal ministries in Argentina, reducing them from 18 to nine. This was followed by a massive currency devaluation.

Milei did not stop there. In a recent televised announcement, he said he would “repeal rules that impede the privatization of state companies”.

Those words were backed up by a 300-measure order designed to deregulate internet services, eliminate various government price controls, repeal laws that discourage foreign capital investment, abolish the Economy Ministry’s price observatory, and “prepare all state-owned companies to be privatized”.

Milei capped it off on Wednesday with a 351-page omnibus bill that takes aim at Argentina’s regulatory state and would grant Milei emergency powers “until December 31, 2025”.

Giving any president emergency powers is no small thing, even during a genuine crisis. Though Milei’s bill is designed to curb state power, not to expand it — a notable contrast to the typical crisis response paradigm — history and recent events in El Salvador show how emergency powers can be abused and used to violate human rights and liberty.

Whether Milei can get his full agenda through is unclear, but there’s reason for optimism.

His stunning election is itself evidence that Argentines are hungry for change. He’s already shown an impressive pragmatism to wed to his undeniable political flair, surrounding himself with a slew of talented policy experts. This includes Federico Sturzenegger, a former chief economist of Argentina’s central bank who two decades ago managed to turn around the failing Bank of the City of Buenos Aires. Sturzenegger’s reforms were so effective they became a Harvard case study.

Success is by no means certain, of course.

Recovering from decades of Peronism — a blend of socialism, nationalism, and fascism, which dominated Argentina’s political system for years — will not happen overnight. And Argentina’s political class has spent the last few years making a bad situation worse.

Still, the great economist Adam Smith once observed that the key to economic prosperity is surprisingly simple.

“Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice,” the Wealth of Nations author said.

Milei knows this. He has not just read Smith (in addition to Austrian school economists such as Friedrich Hayek and Ludwig von Mises). In a 2017 profile, he dubbed himself “Adam Smith’s heir.”

A heavy dose of Adam Smith is precisely what Argentina needs, and Milei has correctly diagnosed the affliction of Argentina’s once-prosperous economy.

“The state doesn’t create wealth; it only destroys it,” Milei said in a widely viewed 2023 interview.

January 13, 2024

The ongoing encrapification of the internet – “When I hear the phrase ‘web platform’ I reach for my gun”

Filed under: Business, Economics, History, Media, Technology — Tags: , , — Nicholas @ 05:00

Ted Gioia used to be a techno-optimist, eagerly looking forward to ever-improving online experiences. He, like so many of us, has reluctantly come to the conclusion that those hopes are fading out of sight:

I once loved new technology. I lived in the heart of Silicon Valley for 25 years, and was bursting with enthusiasm for its free-wheeling mission to transform the world — and have some fun along the way.

When the Worldwide Web made its debut, I thought I’d found Nirvana. It was like tech was turning everything into a game.

But look at me now. When I hear the phrase “web platform” I reach for my gun.

Where did it go wrong? Did I just get old and embittered? Or did something change in the tech world?

Let me share a story that might help us decide.

What kind of business spends hundreds of billions over 10 years — just to get worse?

This is a story about the birth of the search engine.

There were no commercial search engines back in 1993. But a Stanford student named David Filo compiled a list of his 200 favorite websites.

His buddy Jerry Yang helped turn this into an online list. They called it “Jerry’s Guide to the Worldwide Web”. Filo and Yang added new websites every day to their list — and classified them according to categories.

This turned into Yahoo.

Here’s my favorite part of the story: These two students didn’t even know they were running a business.

They did it for fun. They did it out of love. They did it because it was cool. “We wanted to avoid doing our dissertations”, Yang later explained.

But a venture capitalist named Mike Moritz heard about Filo and Yang, and tracked them down. The founders of Yahoo were living in total squalor in a trailer littered with stale food and pizza boxes, strewed alongside sleeping bags and overheating computers. A phone rang constantly — but nobody bothered to pick it up.

Moritz was dismayed by this dorm-room-gone-wild ambiance, but he was impressed with the students’ web searching technology. So he asked them the obvious question: How much did they plan to charge users?

Filo and Yang had no answer for this. They wanted to give their tech away for free.

Yahoo wasn’t even selling ads back then. It wasn’t tracking users and selling their private information. It didn’t even have a bank account.

But it was a community and had millions of users.

That was a word you heard frequently in Silicon Valley in the early days. People didn’t build web platforms — they formed online communities.

It was a FUN community. People enjoyed being a member. Even the absurd name Yahoo was part of the game — although early investors hated it.

Yang’s job title was “Chief Yahoo”. Filo’s position was “Cheap Yahoo”.

Investors always hate those kinds of things.

But a new web business, back then, was expected to have a silly name. Here are some of the websites launched in the mid-1990s.

Moritz wanted to turn Yahoo into a business. And the founders realized that their fun community was growing faster than they could handle in their down-and-out trailer. So they sold out 25% of Yahoo for $1 million.

January 10, 2024

QotD: The root of leftism is envy

Filed under: Books, Economics, Politics, Quotations — Tags: , , , — Nicholas @ 01:00

    “Social justice” is sacralized envy.

Which fits a lot better on a Pepe the Frog meme, you must admit.

Note also the slight, but important, change in emphasis — from “hate” to “envy”. Recall that [Economics in One Lesson author Henry] Hazlitt was writing in 1946, when material deprivation was still a thing, even for Americans. Back then it was assumed that the hate sprang from the envy, which meant that the hatred could eventually be dissipated. It implied an endpoint. Hazlitt, like seemingly everyone else on the Right, took Lefties at their word — that some level of “equality”, by which they meant material prosperity, would cause the Left to finally hang up their jocks and hit the showers.

Three quarters of a century later, we know that’s not true. There’s nothing you could give them that would ever satisfy them. Go ahead, do it Jesus-style — turn the other cheek, give them your coat and your cloak, walk with them two miles, all that jazz. You know as well as I do what will happen — they’ll still hate you. It doesn’t matter what the “reasons” are. Before, they hated you because they didn’t have a coat and cloak. Now they’ve got yours, but they still hate you, because you’re right-handed, or blonde, or have webbed toes. Or because you don’t have webbed toes.

Whatever, something, anything. I won’t bother repeating the O’Brien quote from 1984; you’ve heard it enough by now to know what I mean when I say that for the Left, the point of envy is envy. They don’t envy you for what you have. They don’t even envy you for what you are. They just envy. The mere fact that you exist, a separate entity from them, means that they’re not all there is in the world. In other words — French judges, take note — we’re down to three words:

    Leftism is solipsism.

They envy your mere existence, since you are the walking, talking proof that not everything in this world is as shriveled and petty and miserable as they are.

Severian, “Crossing the Bar”, Rotten Chestnuts, 2021-04-06.

January 5, 2024

The value of college degrees

Filed under: Economics, Education, USA — Tags: — Nicholas @ 04:00

Ted Gioia isn’t a college dropout, but he’s seen enough to realize that given how his career has gone, he might well have saved himself a lot of time and money by not going to university in the first place:

I spent almost a decade and huge sums of money — much of it borrowed in the form of student loans — to earn multiple degrees from elite institutions.

But I don’t have a degree in music — the field that became my vocation. And I never took a single course or lesson in jazz (my specialty) during my entire life.

I wasn’t a dropout, not even close. But it’s sobering to consider my life in retrospect, and see how much it relied on what I taught myself outside of the classroom. So I now have a very different view of college than I did back when I was a student.

My more mature view is as follows:

(1) A college degree is more about signaling your worth than about learning.
This is hardly a brilliant insight — many are now saying this. But when you’ve lived it yourself, it changes your perspective on everything.

[…]

(2) College provides inspiring role models — but they also exist in other settings.
I was blessed with a small number of teachers and mentors who taught me by example — and most of this happened at high school and college. There is no substitute for seeing greatness in the flesh at close hand.

But this can happen outside of college — my wife, for example, had those experiences working as a dancer and choreographer in New York. She learned more from her mentor Erick Hawkins than from any college professor.

[…]

(3) Dropping out is a real option with genuine upside, but it’s not for everybody.
Let me put it as simply as possible: Many successes are dropouts, but few dropouts are successes.

I would advise against abandoning your education for simple reasons of avoidance — because classes are a hassle, tests are a bummer, etc. But if you have a genuine vision of your life and the skills to achieve it, college is purely optional. And perhaps even hazardous.

(4) As the college experience becomes more expensive and close-minded, the appeal of alternatives increases exponentially.
At what price does college become a bad deal? I don’t have an answer to that, but we must be close to a tipping point.

If I tried to replicate my formal education today, it would cost ten times as much. I would have student loans as large as the national debt of a mid-sized country. That’s just ridiculous.

But this kind of irrational endpoint results when a bloated bureaucracy increases tuition at more than the inflation rate every year — and continues doing so for a half century. The people running our major universities think they can get away with this because customers want impressive diplomas, and can be squeezed to an infinite degree.

But infinity doesn’t actually exist in human affairs. And unsustainable trends eventually prove just that, namely that they are unsustainable.

(5) The smartest people will increasingly bypass the system.
I can’t emphasize this enough. My advice to young people today is very different from what I would have said just 5 years ago.

I now tell them to find ways to work outside of bureaucratic legacy institutions.

[…]

(6) Dropouts really do change society.
As someone who invested so much time and money in big-ticket credentials, that’s painful to admit. But I’ve seen too much to ignore the facts. I now grasp that people who are genuine visionaries know at an early stage that they can teach themselves, think for themselves, and manage themselves. Those are more valuable skills than any degree.

So maybe I didn’t drop out like my friend’s buddy at Harvard, back in the mid-1970s. But I wouldn’t laugh at the idea nowadays, the way I did back then. And if I had everything to do over again, I might drop out myself.

QotD: Hong Kong and the “league table” of world economic freedom

Filed under: China, Economics, Liberty, Quotations — Tags: , , — Nicholas @ 01:00

The Fraser Institute issued its annual Economic Freedom of the World report last week. It didn’t get much attention; it never does these days. Considered as a league table, the report is very boring and static, and makes poor copy.

The same countries typically appear at the top from year to year, and are separated mostly by microscopic, irrelevant differences. For 2017, whence the data in the new report come, Canada sat in eighth place just a hair above Australia and a hair below the U.K. Ascending to the top, we meet other siblings of the English-speaking world, Ireland and the U.S.; the Swiss Republic stands in its typical fourth; the relatively wild child of the Commonwealth, New Zealand, remains third; and then, in the top two places, you have the twin beacons of radical economic freedom, Singapore and Hong Kong.

Ah, yes, Hong Kong. The Special Administrative Region seems, for now, to have won a short-term victory in its struggle to preserve the conditions of its reunion with mainland China. This has not, ostensively, been a struggle over economic freedom per se, but it is not a coincidence that the rioting ultimately originated in a conflict over bookstores. It is mighty hard to draw a line where “economic” freedom stops and purely personal or civil freedoms begin, and the design of the index reflects this. It has a large basic rule-of-law component, includes mobility rights under the free trade factor, and takes points away for imposing military conscription. (This is surely a tiny tribute to the shade of Milton Friedman, who was one of the originators of the index.)

Even if Hong Kong’s immediate quarrel with China has been resolved for now, it is only a manifestation of what is likely to be a longer game. Clever columnists always like exoticizing talk about how the Chinese think in generations, but when it comes to Hong Kong, the cliché has weight. The 2019 riots, in showing how attached young HKers are to their distinct identity and to the English-speaking world, have revealed a nightmarish, even delegitimizing failure by the Chinese Communists. Mainland influence on Hong Kong education and politics has been used with the intention of prolonging and deepening the spirit of ’97; China, so often deemed the super-country of the future by admiring or fearful intellectuals, has tested the results of this effort in the eyes of the world and been made a laughingstock.

Colby Cosh, “Hong Kong’s still king in economic freedom rankings … for now”, National Post, 2019-09-17.

January 2, 2024

QotD: Cigarette smuggling and the powers-that-be

Filed under: Economics, Government, Liberty, Quotations, USA — Tags: , , , , , , — Nicholas @ 01:00

[In the 1960s and 70s,] smoking was rapidly becoming an expensive vice … so expensive, in fact, that shaving a few cents per pack could make a real difference in your daily quality of life. If you could get your smokes off the back of a truck at even 30 cents per pack …

At that point, the Powers That Be were in trouble. Butt-smuggling was cutting into their projected tax revenues — tax revenues which, being governments, they’d already spent several years in advance. That’s bad.

Much worse, though, was the realization that, the more people bought their smokes off the back of a truck in Weehawken, the more those people realized that 99% of law “enforcement” is really “convincing people to voluntarily comply with the law”. As they should’ve realized from Prohibition back in the Twenties, and would soon have the opportunity to learn again with the War on Drugs, 1980-present, lifestyle laws are effectively unenforceable. Not even the most draconian techno-fascists, armed with 100% realtime surveillance, can stop people from getting high off something.

And that’s the worst knock-on effect of all, because the attempt turns “getting high” into a rebellious little thrill. You’re not just getting drunk / burning one down / smoking a Mob-supplied cigarette, you’re sticking it to The Man. If you don’t believe me, watch what happens to pot consumption in college towns once it’s fully legalized. Hint: It’s the same thing that happens to college kids’ alcohol consumption after they turn 21 — now that the cheap little thrill of being the rebel with the fake ID is gone, drinking loses a lot of its charm. Similarly, 99% of the “legalize it!” crowd’s “arguments” are just virtue signaling — they’re letting you know what rebels they are by breaking the pot laws. If you really want to cut down the consumption of intoxicants in a college town, at least, simply legalize ’em all. Your few true addicts will provide a spectacular lesson in Darwinism to the student body, but the vast majority of kids will be all but straight-edge.

Severian, “The Mob, Faux-tism, and the Ever-Rising Costs of Compliance”, Founding Questions, 2021-02-02.

December 26, 2023

QotD: The economic lessons of A Christmas Carol

Filed under: Books, Britain, Economics, History, Quotations — Tags: , , , — Nicholas @ 01:00

Sometimes A Christmas Carol is read as a critique of capitalism, which is understandable. Dickens had, for example, seen firsthand the horrors of 19th-century English coal mines, where young children sometimes slaved away in darkness and despair. Rather than throw out capitalism, however, Dickens may have sought to soften its harsher edges. The Economist magazine once suggested the tale was not so much a Karl Marx-style attack as it was the work of a reformer.

After all, Tiny Tim and the street children of London don’t run Scrooge out of town like a pariah. Nor does Scrooge abandon his business to dedicate his life to eastern philosophy. Rather, he learns to voluntarily spread his wealth around, not so differently than Bill Gates or MacKenzie Scott might do today.

One could draw the conclusion, therefore, that a businessman who has accumulated vast wealth can do many great things through charity. Today, the “Giving Pledge” signed by Warren Buffet and others, as well as elements of the “Effective Altruism” movement, adopt a model of this sort, which essentially says the best way to do good is to make a lot of money. Scrooge’s belated charitability never would have been possible if London had been home to communist breadlines.

The idea goes beyond charity. In The Constitution of Liberty, the great economist Friedrich Hayek argued that it’s socially beneficial to have a leisure class of wealthy individuals pursuing their idiosyncratic passions or even vanities. Today, Jeff Bezos and Elon Musk plan to take us to the stars with SpaceX and Blue Origin. Will they make it to Mars or beyond? They might not beat the odds, but it can’t happen if they don’t try.

One might apply the same logic to cryptocurrencies. Like Scrooge’s wealth, they make some people uncomfortable, and at the moment they can resemble online gambling. But that doesn’t mean they should be banned or replaced by a boring, government-run alternative. Like Musk and Bezos’s space aspirations, there’s potential for the technology to revolutionize an aspect of life — in this case, financial transactions on the internet. That potential is just as-of-yet unfulfilled.

James Broughel, “The Hidden Economic Lesson in A Christmas Carol“, Foundation for Economic Education, 2021-12-24.

December 24, 2023

QotD: Dreaming of George Bailey’s world while living in Pottersville

Filed under: Economics, Government, Media, Quotations, USA, WW2 — Tags: , , , , , , , — Nicholas @ 01:00

George Bailey, the hero of It’s a Wonderful Life, missed the two events that made the ideal man of his time, place, and social class: going to college and serving (as an officer, of course) in the Second World War. Instead of doing those things, either of which would have sent him out into the world beyond the limits of Bedford Falls, he remained at home, taking care of his family, his business, and his community. In other words, the hero of America’s favorite exercise in Yuletide nostalgia epitomized a way of life that, in the season of the film’s cinematic debut (the summer of 1946), was already on its way to the dustbin of history.

This, the most enduring of the many works of Frank Capra, became the Atlantis myth of post-war America. That is, those who, over the course of the last half-century, saw It’s a Wonderful Life on television, knew well that the age of community and connection depicted on their screens had already passed into the realm of legend. Moreover, to add injury to insult, they also knew that, if they wished to enjoy the fruits of a middle-class existence, they would have to live in the manner of vagabonds.

In the movie, slum-lord Henry Potter tries, but fails, to turn the provincial paradise of Bedford Falls into a run-down haunt of spinsters, drunks, and floozies. In the real world, it was Franklin D. Roosevelt who put the kibosh on the original Main Street, USA. To be more precise, the principal achievements of America’s greatest tyrant, the Great Depression and the Second World War, undermined the financial, legal, and cultural foundations of the “wonderful life”. Thus, by the time this process had run its course, inflation had made a fool’s game of simple thrift, the replacement of law with regulation had hobbled private enterprise, and people who had left home for the sake of college, work, or military service found themselves lost in a sea of strangers.

In response to these changes, colleges and universities stepped up to the proverbial plate, happy to offer substitutes for the things that had been lost. They gave young people a chance to obtain certificates that would attest to both their suitability for service in the ranks of corporate minions and their social respectability. At the same time, these institutions gave older people a way to convert their value-losing cash into an asset that promised to pay dividends that would benefit their children (and, indeed, their grandchildren) for decades to come.

Thus arose the people I have come to call the MICE (Mobile, Individualistic, College Educated) people. Bereft of regional accents, productive property, and deep connections to friends and relations, they wandered the world, building networks, acquiring degrees, and padding resumés. However, after two generations of such peripatetic solipsism, the age of the MICE people is coming to an end.

Young men of parts, who realize that college has nothing to do with either liberal learning or vocational training, are simultaneously taking up skilled trades and stocking their MP3 players with learned podcasts. At the same time, young women of quality are beginning to think that the traditional troika of Kirche, Küche, und Kinder offers better odds of deep satisfaction than life as a hormone-hobbled, Starbucks swilling, girl boss.

So, if you know young people like the ones I’ve just described, do posterity a favor, and put them in contact with each other. After all, they deserve a life as wonderful as that of George and Mary Bailey.

Bruce Ivar Gudmundsson, “College, Class, and Christmas”, Extra Muros, 2023-08-06.

December 9, 2023

The coming Micro-Macro culture war … and who’s going to win it

Filed under: Business, Economics, Media, Technology, USA — Tags: , , , , , , , , — Nicholas @ 05:00

Ted Gioia outlines the dismal state of the “macro” culture — television, movies, newspapers, book publishing and all the big corporations that control them — with the dynamism of the “micro” culture:

In the beginning, all culture was microculture.

You knew what was happening in your tribe or village. But your knowledge of the wider world was limited.

So you had your own songs and your own stories. You had your own rituals and traditions. You even had your own language.

But all these familiar things disappeared when you went off into the world. That was dangerous, however. That’s why only heroes, in traditional stories, go on journeys.

You learn on the journey. But you might not survive.

But all that changed long before I was born.

In my childhood, everything was controlled by a monoculture. There were only three national TV networks, but they were pretty much the same.

    When I went to the office, back then, we had all watched the same thing on TV the night before. We had all seen the same movie the previous weekend. We had all heard the same song on the radio while driving to work.

The TV shows were so similar that they sometimes moved from CBS to NBC, and you never noticed a change. The newscasters also looked pretty much the same and always talked the same — with that flat Midwestern accent that broadcasters always adopted in the US.

The same monoculture controlled every other creative idiom. Six major studios dominated the film business. And just as Hollywood controlled movies, New York set the rules in publishing. Everything from Broadway musicals to comic books was similarly concentrated and centralized.

The newspaper business was still local, but most cities had 2 or 3 daily newspapers — and much of the coverage they offered was interchangeable. Radio was a little more freewheeling, but eventually deregulation allowed huge corporations to acquire and standardize what happened over the airwaves. [NR: I suspect the “freewheeling” went away once the government started imposing regulations, and the corporate consolidation was enabled when they “deregulated” the radio licensing regime several decades later.]

When I went to work in an office, back then, we had all watched the same thing on TV the night before. We had all seen the same movie the previous weekend. We had all heard the same song on the radio while driving to work.

And that’s why smart people back then paid attention to the counterculture.

The counterculture might be crazy or foolish or even boring. But it was still your only chance to break out of the monolithic macroculture.

Many of the art films I saw at the indie cinema were awful. But I still kept coming back — because I needed the fresh air these oddball movies provided. For the same reason, I read the alt weekly newspapers and kept tabs on alt music.

In fact, whenever I saw the word alt, I paid attention.

That doesn’t mean that I hated the major TV networks, or the large daily newspaper, or 20th Century Fox. But I craved access to creative and investigative work that hadn’t been approved by people in suits working for large organizations.


The Internet should have changed all this. And it did — but not much. Even now the collapse in the monoculture is still in its early stages.

But that’s about to change.

If you don’t pay close attention, the media landscape seems pretty much the same now as it did in the 1990s. The movie business is still controlled in Hollywood. The publishing business is still controlled in New York. The radio stations are still controlled by a few large companies. And instead of three national TV networks plus PBS, we have four dominant streaming platforms — who control almost 70% of the market.

So we still live in a macro culture. But it feels increasingly claustrophobic. Or even worse, it feels dead.

Meanwhile, a handful of Silicon Valley platforms (Google, Facebook, etc.) have become more powerful than the New York Times or Hollywood studios or even Netflix. It’s not even close — the market capitalization of Google’s parent Alphabet is now almost ten times larger than Disney’s.

But here’s the key point — these huge tech companies rely on the microculture for their dominance.

Where is Facebook without users contributing photos, text and video? Where is Google’s YouTube without individual creators?

In terms of economic growth or audience capture, the microculture has already won the war. But it doesn’t feel that way.

Why not?

First and foremost, Silicon Valley is a reluctant home for the microculture. To some extent Alphabet and Facebook are even going to war with microculture creators — they try to make money with them even while they punish them.

  • So Mark Zuckerberg needs creators, but won’t even let them put a live link on Instagram and limits their visibility on Facebook and Threads.
  • Alphabet needs creators to keep YouTube thriving, but gives better search engine visibility to total garbage that pays for placement.
  • Twitter also claims it wants to support independent journalists — but if you’re truly independent from Elon Musk, your links are brutally punished by the algorithm.

This tension won’t go away, and next year it will get worse. The microculture will increasingly find itself at war with the same platforms they rely on today.

And legacy media and non-profits are even more hostile to emerging media. Go see who wins Pulitzer Prizes, and count how many journalists on alternative platforms get honored.

I’ll save you the trouble. They don’t.

December 8, 2023

QotD: Prices as information

Filed under: Economics, Quotations — Tags: , , , , , — Nicholas @ 01:00

Price = information, gang. Adam Smith said that any item’s real value is what its purchaser is willing to pay, and this is exactly the kind of thing he was talking about.

Let’s all take another huge toke and return to our Libertarian paradise, where all conceivable information is both completely accurate and totally free to circulate. And since we’re now all so very, very mellow, let’s give Karl Marx due credit. One of his main gripes with “capitalism” is that it “commodifies” everything. Everything has its price under “capitalism”, Marx said, even stuff that shouldn’t – human life, human dignity. Since this is a college classroom and I’m the prof, I can assign some homework. Go google up “kid killed over sneakers”. You can always find stories like that. Put your natural, in-many-ways-admirable young person’s urge to rationalize aside, and simply consider the information. What were those Air Jordans really worth, based on the stuff we’ve learned today?

See what I mean? Marx had a point. What are those sneakers worth, considered from the standpoint of “demand”? Obviously more than whatever a human life is worth, considered from the same standpoint. Hence Marxism’s enduring appeal to young people whose hearts are in the right place. “Commodificiation”, or “reification” as he sometimes called it, is very real, and very nasty …

Severian, “Velocity of Information (I)”, Founding Questions, 2020-12-26.

December 2, 2023

Joe Biden solves the inflation problem, fat!

Filed under: Business, Economics, Government, Media, Politics, USA — Tags: , — Nicholas @ 04:00

Like any lying dog-faced pony soldier would know, it’s as easy as saying “Trunalimunumaprzure“:

Inflation is kicking just about everyone in the junk here lately, regardless of whether that junk is an innie or an outie. It’s been rough on a lot of us, but I know just how hard it’s been on me and mine.

Prices are up significantly over the last few years and my income isn’t up nearly as much. This creates issues with our finances. The upside is that it’s forced me to be better with money.

But prices are still higher than Willie Nelson on a SpaceX flight.

Luckily, President Joe Biden has figured out the solution to all our problems. He’s going to just tell companies to drop prices.

Yes, seriously.

    This week, the White House announced the launch of a Council on Supply Chain Resilience, created with the hope to “strengthen America’s supply chains” and “lower costs for families.”

    President Joe Biden delivered remarks from the White House on Monday to announce the new council’s creation. He touted the lower inflation rate and falling grocery prices but admonished American companies for, in his view, not going far enough.

    “Let me be clear: To any corporation that has not brought their prices back down — even as inflation has come down, even as supply chains have been rebuilt — it’s time to stop the price gouging,” Biden warned, imploring them to “giv[e] the American consumer a break.”

Here’s the issue, at least as I see it.

At Thanksgiving, it was noted here that prices are nearly 20 percent higher than in 2019. This while inflation has supposedly decreased. Prices are still high because it’s not so much that inflation has fallen but that the rate of inflation’s increase has fallen. It doesn’t mean prices should drop, only that they should increase at a slower rate.

November 30, 2023

The challenge facing Javier Milei

Craig Pirrong outlines just how much work Argentinian President-Elect Javier Milei will have to accomplish to begin to bring Argentina’s government in line with his electoral mandate:

When I wrote Milei is not a leftist, let’s say that rather understates the matter. Milei loathes leftists and leftism, and repeatedly refers to them on television and in public appearances in scatalogical terms, calling them “leftards”. He despises collectivism, and asserts bluntly that leftists are out to destroy you. His mission is to destroy them first.

As someone so vehemently hostile to the left and well outside conventional political categories, Milei’s victory has triggered a mass moral panic, especially in the media. The New York Times coverage was (unintentionally) hilarious: “Some voters were turned off by his past outbursts and extreme comments over years of work as a television pundit and personality.” Well, obviously a lot more weren’t, but I guess one has to take solace where one can, eh, NYT?

Milei’s agenda is indeed a radical one, especially for a statist basket case like Argentina. To combat the country’s massive (140 per cent annualised) inflation, Milei says he will dollarise the economy and eliminate (“burn down”) the central bank. He also wants to reduce radically the role of the state in Argentina’s economy. He says he wants to “chainsaw” the government – and emphasises the point by campaigning with an actual chainsaw.

His election on this programme sparked a rally in Argentine financial markets, with government debt rising modestly and stock prices rallying smartly.

Will Milei be able to deliver? Some early commentary has doubted his ability to govern based on the fact that his party’s representation in the legislature is well below a majority. That may be an issue, but not the major obstacle to Milei’s ability to transform Argentina into what it was at the dawn of the 21st century: an advanced, rapidly growing economy and a relatively free society.

The real obstacle is one that is faced by anti-statists everywhere – the bureaucracy. (I do not say “civil service” because that phrase is at best aspirational and more realistically a patent falsehood. Akin to the Holy Roman Empire that was neither holy nor Roman, the “civil service” is neither civil nor a service.)

Argentina’s bloated state is its own clientele with its own interests, mainly self-preservation and an expansion of its powers. Moreover, it has created a whole host of patronage clients in business and labour. Milei’s agenda is anathema to this nexus of public and private interests. They will make war to the knife to subvert it.

Even a president with an electoral mandate faces formidable obstacles to implementing his agenda. The most important obstacle is what economists call an “agency problem”. The bureaucrats are agents of the chief executive, but it can be nigh unto impossible to get these agents to implement the executive’s directives if they don’t want to. Their incentives are not aligned with the executive, and are often antithetical. As a result, they resist and often act at cross purposes with the executive.

The modern chief executive’s power to force his bureaucratic agents to toe the line is severely circumscribed. At best, the executive can make appointments at the upper levels of the bureaucracy (such as the heads of ministries or departments), but the career bureaucrats who can make or break the executive’s policy are beyond his reach, and not subject to any punishment if they subvert the executive’s agenda.

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