All you need to know about economics

From a graduation speech delivered by Nobel Prize winner, Professor Thomas Sargent.

The Greatest Graduation Speech Ever Given Is Bullet-Point List Of 12 Economic Concepts

I remember how happy I felt when I graduated from Berkeley many years ago. But I thought the graduation speeches were long. I will economize on words.

Economics is organised common sense. Here is a short list of valuable lessons that our beautiful subject teaches.

1. Many things that are desirable are not feasible.

2. Individuals and communities face trade-offs.

3. Other people have more information about their abilities, their efforts, and their preferences than you do.

4. Everyone responds to incentives, including people you want to help. That is why social safety nets don’t always end up working as intended.

5. There are tradeoffs between equality and efficiency.

6. In an equilibrium of a game or an economy, people are satisfied with their choices. That is why it is difficult for well-meaning outsiders to change things for better or worse.

7. In the future, you too will respond to incentives. That is why there are some promises that you’d like to make but can’t. No one will believe those promises because they know that later it will not be in your interest to deliver. The lesson here is this: before you make a promise, think about whether you will want to keep it if and when your circumstances change. This is how you earn a reputation.

8. Governments and voters respond to incentives too. That is why governments sometimes default on loans and other promises that they have made.

9. It is feasible for one generation to shift costs to subsequent ones. That is what national government debts and the U.S. social security system do (but not the social security system of Singapore).

10. When a government spends, its citizens eventually pay, either today or tomorrow, either through explicit taxes or implicit ones like inflation.

11. Most people want other people to pay for public goods and government transfers (especially transfers to themselves).

12. Because market prices aggregate traders’ information, it is difficult to forecast stock prices and interest rates and exchange rates.

Posted in Uncategorized | 10 Comments

The shrinking US middle class

Here’s a story from The New York Times via Instapundit that should surprise no one if they’ve been paying attention, The American Middle Class Is No Longer the World’s Richest. Because it is The New York Times, it is unable to understand the problem, since it puts it down to rising income inequality as the cause, but then there is hardly any major social issue it is willing any longer to discuss honestly, assuming the kinds of people who write for The New York Times any longer even have a clue what causes what. They do, however, take note of this, in a country with the largest expenditure on education per student in the world:

Americans between the ages of 55 and 65 have literacy, numeracy and technology skills that are above average relative to 55- to 65-year-olds in rest of the industrialized world, according to a recent study by the Organization for Economic Cooperation and Development, an international group. Younger Americans, though, are not keeping pace: Those between 16 and 24 rank near the bottom among rich countries, well behind their counterparts in Canada, Australia, Japan and Scandinavia and close to those in Italy and Spain.

But it’s not just the middle class who are being nailed:

The poor in the United States have trailed their counterparts in at least a few other countries since the early 1980s. With slow income growth since then, the American poor now clearly trail the poor in several other rich countries. At the 20th percentile — where someone is making less than four-fifths of the population — income in both the Netherlands and Canada was 15 percent higher than income in the United States in 2010.

But as pointed out here, the plundering of the middle class from both below and above is now standard in the US. This is not from The New York Times:

Much of America’s moneyed elite has already shifted its allegiance to the Left, especially in cities. Wealthy, educated urbanites hold generally liberal social values and can afford the higher taxes “blue” cities like Chicago impose—especially when those taxes help pay for the upscale amenities they desire. Even when the mayoral administration is less friendly, the urban elite tends to get its needs met. At the same time, the urban poor have remained loyal to the Democrats, no matter how little tangible improvement liberal policies make in their lives. And the various unions, community organizers, and activist groups that advocate for the poor profit handsomely from the moneys directed toward liberal antipoverty programs.

The US is a nation living on its capital and not its income. It will not end well.

Posted in International | 28 Comments

Rape and pillage: the facts

In response to my column on Anzac denial in The Australian today, I received an email from Mr H R Thomas in Queensland drawing my attention to the work of Dr Lindy Edwards.

I have since become the 42nd person to view Dr Edward’s November 2013 youtube hit, Creating a Progressive Economics. I do not recommend it.

Dr Lindy Edwards

In happier times:
Dr Lindy Edwards

It was Dr Edward’s views on soldiering, however, rather than her perplexing approach to economics, to which Mr Thomas drew my attention.  In June 2013, Dr Edwards wrote in The Age and The Sydney Morning Herald  (where else?):

There is a long tradition of firing up fighting men by invoking their shared ability to sexually degrade women. They tap into an ideal of male sexual power to create a cocktail of ego, aggression and sexual energy that they channel into battle.

Mr Thomas was intrigued. He  wrote to Dr Edwards:

I served with the RAAF in Vietnam while my father served with the RAAF in the Pacific in WWII.  Neither of us encountered the phenomenon you referenced.   

Since leaving the RAAF I have further developed my interest in military history but, I cannot find any reference to your claim.  Consequently, I would be grateful if you would provide me with examples where commanders have fired up their men using the technique you described.


H R Thomas

Dr Edwards replied:

I teach at ADFA and I see it all the time.

Mr Thomas found her answer unsatisfactory, and replied in the following terms:

Dear Doctor Edwards,

I can tell you do not lecture in manners.

Here is what you wrote in The Age:

”They tap into an ideal of male sexual power to create a cocktail of ego, aggression and sexual energy that they channel into battle”.

I repeat my request:  “I would be grateful if you would provide me with examples where commanders have fired up their men using the technique you described”.

“I teach at ADFA and I see it all the time” was not an answer.  It was an evasion and in no way responded to my request.

Would you kindly provide me with examples which substantiate your claim.


H R Thomas

At the time of going to press, no reply had been received from Dr Edwards.

Posted in Uncategorized | 133 Comments

Mark Steyn discussing Brendan O’Neill interviewing George Brandis

A bit convoluted, but here goes. Mark Steyn has an article, Medieval Moralists, in which he quotes from an interview with George Brandis conducted by Brendan O’Neill which may be found in a posting with the heading, Free Speech Now. This is the passage Steyn has taken from that Brandis interview with O’Neill:

Brandis says he’s been a fan of free speech for ages. He reminds me that in his maiden speech to the Senate, given 14 years ago when he was first elected as senator for Queensland, he let everyone know that ‘one of my most fundamental objectives would be to protect freedom of thought and expression’. He tells me he has long been agitated by ‘the cultural tyranny of political correctness’. But there were two recent, specific things that made him realise just what a mortal threat freedom of speech faces in the modern era and that he would have to dust down his Mill, reread his Voltaire, and up the ante in his war of words against, as he puts it, the transformation of the state into ‘the arbiter of what might be thought’. The first thing was the climate-change debate; and the second is what is known down here as The Andrew Bolt Case.

He describes the climate-change debate – or non-debate, or anti-debate, to be really pedantic but also accurate – as one of the ‘great catalysing moments’ in his views about the importance of free speech. He isn’t a climate-change denier; he says he was ‘on the side of those who believed in anthropogenic global warming and who believed something ought to be done about it’. But he has nonetheless found himself ‘really shocked by the sheer authoritarianism of those who would have excluded from the debate the point of view of people who were climate-change deniers’. He describes as ‘deplorable’ the way climate change has become a gospel truth that you deny or mock at your peril, ‘where one side [has] the orthodoxy on its side and delegitimises the views of those who disagree, rather than engaging with them intellectually and showing them why they are wrong’.

He describes how Penny Wong, the Labor Party senator for South Australia and minister for climate change in the Julia Gillard government, would ‘stand up in the Senate and say “The science is settled”. In other words, “I am not even going to engage in a debate with you”. It was ignorant, it was medieval, the approach of these true believers in climate change…’

The great irony to this new ‘habit of mind’, he says, is that the eco-correct think of themselves as enlightened and their critics as ‘throwbacks’, when actually ‘they themselves are the throwbacks, because they adopt this almost theological view, this cosmology that eliminates from consideration the possibility of an alternative opinion’. The moral straitjacketing of anyone who raises a critical peep about eco-orthodoxies is part of a growing ‘new secular public morality’, he says, ‘which seeks to impose its views on others, even at the cost of political censorship’.

And as for free speech being free, if you go to the article you can find a bit of first-person experience shared by Steyn in replying to some Canadian nong, Adam Stirling, who finds it a bit tedious to hear Steyn go on about free speech:

The only reason Master Stirling can read me in a Canadian national newspaper is because Maclean’s and I fought a long, hard public battle and won it! And we’ve got seven-figure legal bills to prove it! How funny is that?

And therein lies a tale, which Steyn’s article also discusses.

UPDATE: Here is Mark Steyn again discussing the slow death of free speech. It all needs to be read but here is a bit from the middle:

I’m opposed to the notion of official ideology — not just fascism, Communism and Baathism, but the fluffier ones, too, like ‘multiculturalism’ and ‘climate change’ and ‘marriage equality’. Because the more topics you rule out of discussion — immigration, Islam, ‘gender fluidity’ — the more you delegitimise the political system. As your cynical political consultant sees it, a commitment to abolish Section 18C is more trouble than it’s worth: you’ll just spends weeks getting damned as cobwebbed racists seeking to impose a bigots’ charter when you could be moving the meter with swing voters by announcing a federal programmne of transgendered bathroom construction. But, beyond the shrunken horizons of spinmeisters, the inability to roll back something like 18C says something profound about where we’re headed: a world where real, primal, universal rights — like freedom of expression — come a distant second to the new tribalism of identity-group rights.

Posted in Freedom of speech | 21 Comments

“A lot of these guys are basically shysters and crooks”

James Delingpole has a new book out The Little Green Book of Eco-Fascism: The Left’s Plan to Frighten Your Kids, Drive Up Energy Costs, and Hike Your Taxes!. He is being interviewed here by Ed Driscoll.

“I’m not a scientist and actually given what I’ve seen of scientists in my experiences following the global warming scam, I’m glad I’m not a scientist because a lot of these guys are basically shysters and crooks. They’re not some kind of white-coated elite with a special hotline to the truth. In fact, they’re just ordinary guys and girls trying to earn a living like the rest of us but slightly more dodgily than the rest of us in the one or two egregious cases.”

The left seems to have a system for achieving power by finding some element in every issue that is a giant step too far and then harping on it. No one is uninterested in “the environment” and everyone wants to preserve the planet whatever that might mean. But global warming is so inane and so lacking in evidence that it separates those who have common sense from some kind of herd of conformity. But it also absorbs almost all of the attention so that people who are not interested in seeing the Great Barrier Reef, let us say, ruined if it is in danger from some commercial proposal are still seen as outsiders to these crusaders for a green environment. Their extremism is the problem and their leaders are to an incredible extent in it for the money and political power it gives.

Posted in Global warming and climate change policy | 61 Comments

100-year collection of 85,000 historic films now on youtube

This is quite extraordinary if you are the sort of person for whom history is of interest. The above video of the Rolling Stones arriving in Sydney in 1965 is one example out of 85,000 newsreels that have now been made available on Youtube. This is the full story found in Variety under the heading, British Pathé Uploads Entire 85,000-Film Archive to YouTube in HD:

British Pathé, the U.K. newsreel archive company, has uploaded its entire 100-year collection of 85,000 historic films in high resolution to YouTube.

The collection, which spans 1896 to 1976, comprises some 3,500 hours of historical footage of major events, notable figures, fashion, travel, sports and culture. It includes extensive film from both World War I and World War II.

“Our hope is that everyone, everywhere who has a computer will see these films and enjoy them,” British Pathé GM Alastair White said in a statement. “This archive is a treasure trove unrivaled in historical and cultural significance that should never be forgotten. Uploading the films to YouTube seemed like the best way to make sure of that.”

Personalities captured in the newsreels include Princess Diana, Arnold Schwarzenegger, Elizabeth Taylor, Marilyn Monroe, Fidel Castro, John Lennon, Salvador Dali, Mother Teresa, Muhammad Ali and Charlie Chaplin. British Pathé already makes numerous clips available on its website free for personal use, and it licenses the archive to TV and film producers and other companies and organizations.

This is the link to the entire collection.

Posted in Cultural Issues, History | 20 Comments

Q&A Forum: April 21, 2014

Posted in Open Forum | 266 Comments

Monday Forum: April 21, 2014

Posted in Open Forum | 966 Comments

“Without God, people can do as they please”

china christianity

One of the most enlightening books I have ever come across was The Victory of Reason: How Christianity Led to Freedom, Capitalism, and Western Success by Rodney Stark. And at the very end of this book there is a quote from a Chinese scholar who had been part of an investigation into the causes of Western economic success. This is a direct quote of what this Chinese scholar had said:

One of the things we were asked to look at was the success, in fact, the pre-eminence of the West, all over the world. We studied everything we could from the historical, political, economic and cultural perspective. At first, we thought it was because you had more powerful guns than we had. Then we thought it was because you had the best political system. Next we focused on your economic system. But in the past twenty years we have realised that the heart of your culture is your religion: Christianity. That is why the West is so powerful. The Christian moral foundation of social and cultural life was what made possible the emergence of capitalism and then the successful transition to democratic politics. We don’t have any doubt about this.

I was reminded of this by an article in London’s The Telegraph with the self-explanatory heading, China on course to become ‘world’s most Christian nation’ within 15 years. And while you may be sure the Chinese government has been keeping a watchful eye on where this might go, they have also not been attempting to stamp it out. And there are reasons for this, in keeping with that earlier study:

Some officials argue that religious groups can provide social services the government cannot, while simultaneously helping reverse a growing moral crisis in a land where cash, not Communism, has now become king.

They appear to agree with David Cameron, the British prime minister, who said last week that Christianity could help boost Britain’s “spiritual, physical and moral” state.

Ms Shi, Liushi’s preacher, who is careful to describe her church as “patriotic”, said: “We have two motivations: one is our gospel mission and the other is serving society. Christianity can also play a role in maintaining peace and stability in society. Without God, people can do as they please.”

In place of a moral order we now have political correctness and the pagan religion of Gaia and the environment. China, meanwhile, may become a Christian nation as we in the West depart from what may be the single most important part of the inheritance we have.

Posted in Cultural Issues, International | 464 Comments

The great tragedy of justice delayed

In The Australian today:
“Watching Barry O’Farrell’s resignation recalled Enoch Powell’s conclusion to his biography of Joseph Chamberlain that “all political lives, unless they are cut off in midstream at a happy juncture, end in failure, because that is the nature of politics and human affairs”.

Posted in Uncategorized | 22 Comments