Clay’s Economics

This was the query at the history of economics website, which I might note, has had quite an interesting response:

I’m working on an analysis of introductory economics textbooks published in the United States between about 1890 and 1950 (the period between Marshall and Samuelson, roughly). I’ve accumulated an ad hoc collection of texts based on the holdings of my library and scattered references in the secondary literature (Elzinga 1992, Walstad et al 1998, and Giraud 2013 in particular), but I was hoping that there might be some more systematic way to generate a universe of texts from which to sample. Does anyone have a recommendation for a good source that discusses principles texts in this period, perhaps with information on relative influence (number of editions, course adoptions, or sales)? Does such a source exist?

This was my own contribution:

In a reply to a recent request for any centenary celebrations coming up in economics in 2016 which was put out by the editors of the History of Economics Review, our HET journal here in Australasia, I wrote:

“2016 is the hundredth anniversary of the publication of what I think of as the best single introductory text on economics published in the twentieth century, Henry Clay’s Economics: an Introduction for the General Reader. I would very happily provide you with a shortish note on this great text – you have to see just its publication history from 1916 to 1942 when the second edition was published to appreciate just how extraordinary it was. Used everywhere, including Oxford and Cambridge, and not just mechanics institutes. Also the best summary of pre-Keynesian theory available, in my view, from any source.”

I realise that the request in this instance is for “introductory economics textbooks published in the United States” and Clay was published by Macmillan in the UK. But looking here at my lovely first edition, the second listing of the publisher’s location reads in a way which does suggest that it would have had a publication history within the US:

“The Macmillan Company
“New York . Boston . Chicago
“Dallas . San Francisco”

And as in indication of its presence in the United States, I also have this: Problems and Exercises to Accompany Clay’s Economics for the General Reader and Ely’s Outlines of Economics, which was published in 1921, whose author was:

“H. Gordon Hayes
“Professor of Economics in Ohio State University”

I might point out that in this set of questions – which you might for fun test your graduate students on for their understanding of economics – it is Clay who is mentioned before Ely.

I will finally mention that in The Great Gatsby, a text as American as it gets, we have this passage in reference to Gatsby himself as he stands waiting in the library for Daisy to arrive:

“[He] looked with vacant eyes through a copy of Clay’s Economics.”

If even Gatsby was reading Clay, who wasn’t?

What I didn’t mention was that I titled my own text to follow Clay’s: Free Market Economics: an Introduction for the General Reader. The number of out and out Keynesian falsehoods that are revealed by going through Clay is astonishing, starting with acceptance of Say’s Law means classical economists always assumed full employment. It’s not a short book, and its lack of diagrams makes it hard for someone of the present generation of economists to bother with, but it very efficiently gets the job done. And naturally, what I like best about it, is that it is the economics of John Stuart Mill, brought up to date for the first half of the twentieth century, just as my own text is Mill for the 21st century. Did I ever mention, by the way, that the cover of my book shows a Mill made of Clay?

Posted in Classical Economics, Economics and economy | 5 Comments

A quarter of the population is now suspect?

Paul Sheehan writing in the SMH:

Monis is a classic case study of why Australia needs to have probationary conditions applied to the residence status and then citizenship granted to immigrants, refugees and asylum-seekers. To cover for mistakes, this probationary status needs to be rigorous and lengthy.

Classic case of over-reach. More than 25% of the Australian resident population is foreign born. When dealing with numbers like that it is better to work by exception. Now we know the process failed in the case of Monis:

Magistrates, lawyers and police prosecutors collectively decided that Monis, with a long history of harassing behaviour, with links to the brutal murder of his former wife, with charges for sexual assaults of multiple women, with a history of extreme political views, with convictions for writing threatening letters, and with an open record of support for jihad, was deemed no threat to society.

Okay – that means that the legal processes need to be tightened up. I suspect that will happen – perhaps too much and in inappropriate ways.

If only we had 5-years of meta-data to detect people like Monis (/sarc).

There are two other points I want to make about Paul Sheehan’s article:

The instability through the Muslim world is growing worse. Thousands of Muslims are killing thousands of Muslims, leaving millions of Muslims displaced. The murder of more than 100 school children in Pakistan on Tuesday is the latest numbing instalment of the butchery being carried out in the name of Islam in Syria, Iraq, Afghanistan, Nigeria, Libya, Pakistan, Somalia, Yemen, Chad and Kenya. Egypt is under martial law. Iran is a theocracy. Numerous outbreaks of jihad-inspired violence have taken place in Western Europe, Russia, Canada, the United States and Australia.

The biggest victims of Islamic fundamentalism are other Muslims. To the extent that we have a refugee program that protects people who are in fear of their lives that means we are going to get more Muslims not fewer. Now there are calls to close our borders and refuse asylum to people from the Middle East. To be fair – there is precedent for this type of policy choice. In the 1930s when Europe was in turmoil and the biggest victims of fundamentalism were other Europeans, many countries closed their borders to European refugees. With the benefit of hindsight, we are now somewhat embarrassed by that decision.

Now some will want to argue (and, no doubt, will tell me in the thread) that there is a huge difference between Jewish refugees and Muslim refugees. I’m not convinced any differences are that big. We should look to our common humanity before we look to our differences. Arguments about people not fitting in and leading lives of crime or turning to Jihad overlook one very important consideration.

To the extent that anyone lives a life of crime or Jihad it is because we have not enforced our own laws.

That is the problem with Monis – people are asking why it is that a man with his track record was not in gaol. In a liberal democracy we have few personal prohibitions – you can eat what you like, how you like, wear what you like, marry whom you please (as long as it is a single person of the opposite gender), worship as you please. You may not circumcise your daughters, beat your wife, or murder your ex-wife or anyone else. It isn’t hard – most people can cope with those rules. When we fail to enforce our own very minimal standards of behaviour it is bit difficult to argue that immigrants don’t live up to our standards when they perceive, quite rightly in the breach, that we have none.

Final point:

A dissident former army major, Bernie Gaynor Jnr, says that more Australian Muslims have gone to fight with IS than have enlisted in the Australian Army this year. His claim has not been disputed by the Army.

Unfair comparison – this confuses stocks and flows. More importantly it overlooks the recruitment problems the ADF faces. I suspect every large AFL club has more members than the ADF has personnel. More kids would have renewed their membership this year than joined the ADF.

Posted in National Security, Politics, Tough on Crime, tough on criminals | 102 Comments

Bankers’ promote green agit-prop

The pathetic defensiveness of the banks is illustrated in this article in the Australian ($).  ANZ is ashamed of its lending policy and has to justify lending to energy investments (other than cost-inducing renewables) by fabricating a number (20 per cent) that the energy it finances is below the national average of greenhouse gas emissions.

What utter bollocks!  If it invested in a new coal based power station it would hit such a number simply because newer technology is more efficient.

Under Chairman Gonski’s green left management, ANZ wants to pretend that it is a public service not a bank.  According to Gonski, “We are equally committed to work with government, business and the community to address the policy risks associated with energy supply and climate change.”  But then, typically talking out of both sides of his mouth he adds, “As a company, it’s not our job to act as the moral police … our job is to ensure the sustainability of our business and to do the right thing by our stakeholders,”

ANZ actually gives the split of renewable to fossil fuel investment in its energy book.  It is 56 per cent gas and coal and a whopping 44 per cent wind and solar.  The latter relies on government mandated subsidies for most of its revenues; if that tap is turned off losses are incurred.  As a community we would be much better off if ANZ ceased all energy related lending.

To protect its intrinsically unviable renewable investments, the bank has a clear interest in joining the conspiracy to maintain the theft from the taxpayer that is the Renewable Energy Target.  Lest we forget, the target is in place to assure wind and solar get the $100 plus per MWh that they need compared to the $40 that is required for the infinitely more reliable fossil fuel based electricity.  Even in the bad old days of tariff protection to manufacturing industry the worst performers: clothing and motor vehicles got by on less than 100 per cent assistance.

Unsurprisingly the agit-prop support to maintain this consumer/taxpayer largesse is immense.  When your business is reliant on government for its viability great lengths are justified in clinging on to this.  For the renewables the economic leeching involves vast spending on the green left players within the media, legal circles and NGOs maintain the pressure on politicians, many of whom are already consumed by the same belief systems.

Posted in Uncategorized | 12 Comments

Rafe’s Roundup 18 Dec

This is all essentially trivia in relation to the main events of the week and I will not attempt to compete with the saturation coverage of those events elsewhere.

Is God a libertarian?. Climate change facts. The new money: College presidents. A suite of good things from Sean Gabb’s Libertarian Blog in the UK.

The struggle to keep alarm about the climate alive.

Top fiction books in 2014. Most expensive books of 2014. Connor Court’s best sellers in 2014.

The wisdom of cows.

They identified two distinct maternal calls – low sounds when a mother was close to her calf, and louder, higher pitched calls when they were out of visual contact. Calves, in return, called out to their mothers when they wanted to start suckling. But the most important finding was that all three calls were individualised – reserved for a particular cow and calf so that each recognised the other.

Gary Larsen on cows.

Around the town. The Australian Institute for Progress, (AIP) “because the future does not look after itself”. IPA HEY. The Sydney Institute. Australian Taxpayers Alliance, Quadrant on line, Mannkal Foundation, Centre for Independent Studies.

Don Aitkin. Jim Rose, feral and utopian!

Sites of interest. Richard Hammer, Free Nation Foundation. Aust NZ libertarian students. Powerline.

For nerds. Melvyn Bragg’s radio program. Stephen Hicks, always interesting for nerds. Econotalk. Misesian stocking-stuffers.

George Wilson, a memorable figure at the Uni of Tasmania.

One of the strongest threads in Wilson’s life was rugby union, which he embraced for its character-building capacity. He had played in three New Zealand provincial sides and in college teams, and on moving to Tasmania he was instrumental in establishing the game there. He played for the State team during 1947-49, captaining it twice, and afterwards acted as State coach and selector. He continued to play rugby for the University of Tasmania and to coach schoolboy teams during the 1950s.

Posted in Rafe, Rafe's Roundups | 12 Comments

Knee-jerk reaction?

Okay – so following the Sydney terrorist attack there are questions to be asked. Like why was he out on bail? But today Tony Abbott went further:

TONY Abbott says it “infuriates” him that legal aid resources are being used to challenge laws, amid concern over funding for Man Haron Monis’ High Court challenge over offensive letters he wrote to the families of Australian soldiers killed overseas.

The Prime Minister, when asked about the case, said it was “not right” that taxpayer funds be used to challenge laws in the High Court.

“We have any number of cases going through the courts which appear to be one way or another publicly funded cases and it’s almost like taxpayers are funding attacks on taxpayers and this is not right,” Mr Abbott told Sydney radio 2GB.

“Obviously people are entitled to go to the law but why they are entitled to go to the law with taxpayer-funding when they are essentially attacking public policy — when they are essentially attacking the policy of the elected government — I think is something which again exasperates and sometimes infuriates the public and frankly sometimes infuriates me.”

Abstracting from the actual individual – let’s consider what Abbott is really saying, that legal aid should be abolished. What else are people doing when they go to court? They are challenging a law of the land. Laws usually result from the policies of the elected government. So are we to believe that only rich people should challenge the law of the land? To be sure there is an argument to be made for that position, but I suspect most Australians would be somewhat uncomfortable with that position.

So let’s ask why Man Haron Monis was out on bail. Let’s ask why he wasn’t on a watch-list. Let’s ask how he managed to a get a sawn-off shotgun (how are those gun control laws going)? But let’s not get carried away. If we think legal aid should exist, then it is going to be used for purposes we don’t always agree with, by people we don’t always approve of.

Posted in Libertarians don't live by argument alone, Politics | 139 Comments

Max Walsh discovers the classical theory of the cycle

Maximillian Walsh has just re-discovered the classical theory of the cycle. This is from today’s AFR: The crises are different, but the cause is the same. Here is the sub-head:

In a global era, the next crisis is always just around the corner. The continuous expansion of debt is the cause at the bottom of all of them.

I suspect that we have been living in a “global era” for the last 250 years at least, so technically I suppose, he’s right. But I think he is trying to say there is something new in the world. He could, if he cared to look, find the same kinds of instability across the whole of the nineteenth century. If he would like to go back farther, I could send him to The Wealth of Nations, or he could investigate the Mississippi or South Sea bubbles, both eighteenth century.

The point is, of course, that with the advent of Keynesian economics, the classical theory of the cycle has disappeared. To my knowledge a full discussion is available from only a single source at the present time, although the Austrians are pretty close.

So yes, there is always another crisis around the corner, all the more so since those who manage our economies are the single most certain cause of it. The real question, then Max is this: what should we do, right now, to prevent this crisis from coming full term, or at least what can we do to make it less of a problem? For this, too, you need to go back to the classical theory of the cycle. They had no guaranteed answers either, but at least they knew what you should not do. And if you would like to see in action the kinds of things they would not have done, check out the Federal Reserve in the US, along with most of the other central banks in charge, and see what they are doing.

Posted in Classical Economics, Economics and economy | 5 Comments

No rush: let’s review it in 2020

I’m pretty sure that the Murray Report on the financial system will soon be gathering dust on the bookshelves of the relevant ministers.  (Can anyone tell me why the government is even bothering to have a tax review; nothing will happen, that’s for sure.)  And, Joe, has quite rightly ruled out any change to the GST.)

I’m not sure about Murray’s recommendations relating to bank capital, but most of the superannuation recommendations are well-based, bar the idea that we can wait for the review of MySuper in 2020 before any of the changes are implemented.  Was Murray having a lend?

(Mind you, the tax recommendations are off the mark – looks like the influence of the left-wing member of the panel won the day.)

There is absolutely no reason to delay acting on the core recommendations now: take default superannuation out of the industrial relations system; conduct periodic tenders for funds to hold the contributions of those workers who do not make a deliberate choice (a range of funds will be needed; don’t forget that monopolies are bad and things have not gone well in Chile on which this idea is based); and assume that workers stay in the same fund when they change jobs unless there is advice to the contrary.  The proposed changes to the governance of the industry super funds (majority independent directors0 are also sound.

There is absolutely no reason to delay any of this.

Here’s the news item from The Fin:

Superannuation funds could be forced to tender for the right to manage hundreds of billions of dollars in retirement savings in an effort to reduce fees for members and remove super from the industrial relations system.

Trustees would also be subject to the same penalties for misconduct as directors of managed investment schemes. Continue reading

Posted in Uncategorized | 5 Comments

Moral cowardice

Julie Szego sets people right:

The reticence around language made sense during the siege as the authorities had asked that certain information be withheld and particular terminology avoided, even though this resulted in verbal contortions and euphemism. …

But though the blood of innocents has since dried, we’re still touchy about definitions. Some people have called this a “terrorist attack”. Others say that because Man Haron Monis was a “lone wolf” it isn’t terrorism. Others still propose it be further downgraded to a “lone nut” attack. “Sydney gunman a criminal, not a terrorist” read one headline on Tuesday. “Lone madman or a networked holy warrior?” asked another. One person argued that as Monis was facing charges of being an accessory to the murder of his ex-wife, it’s appropriate to see him as akin to those bitter men who would lay siege to the Family Court.

It was prudent tactics to deny his self-definition during the siege, but to do so now is to flinch from reality. The overriding narrative of the Sydney siege was not one of intimate partner violence.

The bottom line?

Monis should be seen as a violent criminal and a terrorist. We must name his extremist ideology, accept that it is influential and pernicious and redouble our efforts to confront it as a calm, harmonious community.

There are many arguments that can and should be made about the terrorist attack in Sydney. Yes, it could have been much worse; we should not label law-abiding citizens as being a threat simply because they are Muslim, and so on. Those arguments, however, are not progressed by denying the nature and intent of the events in Sydney.

Posted in National Security | 150 Comments

Sydney Crisis Thread 4

The prime minister, who described Monis as a “madman” today, wants to know how he was able to have “a lend of us for so many years”.

He questioned how the gunman – killed in a hail of gunfire on Tuesday morning – managed to get permanent residency in Australia. It was also vital the review looked into how Monis, who was known to security agencies, was on bail, was on welfare and had a gun licence despite such a long history of violence.


Posted in National Security | 799 Comments

Wednesday Forum: December 17, 2014

Posted in Open Forum | 1,229 Comments