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Quotation of the Day…

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… is from page 51 of my late Nobel-laureate colleague Jim Buchanan’s 1978 paper “From Private Preferences to Public Philosophy,” as this paper is reprinted in James M. Buchanan, Politics as Public Choice (2000), which is volume 13 of the Collected Works of James M. Buchanan; the original published version of this paper is available here):

Little or none of the empirical work on regulation suggests that the pre-public choice hypotheses of regulation in the “public interest” is corroborated.

DBx: More than four decades later this observation remains descriptive.

This reality is – or ought to be – unsurprising. Everyone who graduates from kindergarten understands that incentives matter: if the ease of gaining at the expense of strangers rises relative to the costs of seeking such gains, we expect that more people will attempt to gain at the expense of others. Widespread understanding of this reality is why there is universal support for laws against slavery, theft, fraudulent conveyance, and other attempts to gain at the expense of those who do not consent to being exploited. Put differently, no one would be surprised to learn that empirical studies of a society in which people are free to steal each other’s stuff will be a society filled with an unusually large number of attempts by people to steal each other’s stuff.

And yet very many people toss this common sense aside when pondering regulation by government. (Many people who do this tossing aside of common sense call themselves “progressive.” Strange, that.) Empowered to proscribe and to prescribe actions by strangers, government officials should be expected routinely to exercise this power in ways aimed at seizing private benefits for themselves at the expense of the strangers whom these officials ‘regulate.’ Why is anyone surprised by this reality? Why do so many people assume that the holding of office called “public” or “government” somehow changes individuals fundamentally?

Or perhaps even more realistically: why are so many people blind to the fact that if there are available in society opportunities to gain at the expense of others, individuals who are especially interested in, and adept at, gaining at the expense of others will generally succeed in filling those positions?

By telling ourselves the tale that government, if it is democratic, is at least semi-divine, we dupe ourselves into being duped and pillaged by others. The fact that we humans can imagine matters turning out otherwise – that we can imagine public officials somehow gathering godlike knowledge and then using that knowledge as angels would us it – is not (contrary to popular presumption) a sufficient reason to trust government officials with a great deal of power to “regulate” the affairs of peaceful people.

The post Quotation of the Day… appeared first on Cafe Hayek.



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Economy

Inequality, morals & Marxism

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One thing this crisis is demonstrating is that there are plenty of bad employers: the Guardian and Labour List both have lists of them. Another is that, as Sarah O’Connor says, “the people we need the most are often the ones we value the least.” As Paulo dos Santos says, society “grossly undervalues” care work and other jobs essential to fighting the pandemic.

Both these facts show the need for a Marxian perspective.

First, we must ask: why are care workers and others so underpaid? It is certainly not because they lack moral desert. Nor is it because they lack skills: caring demands immense “soft skills” such as patience, discipline and an ability to get on with people as well as physical ones. From a purely technical point of view – that is, one divorced from socio-economic factors – it would be cretinous to claim that a nurse is less skilled than the grifter opinion-mongers who pollute the media.

Instead, care workers are badly paid because they lack power. Some of this is the result of longstanding norms: work done by women and immigrants has long been stigmatized, devalued and regarded as “unskilled.” But another part of it is simply a lack of outside options and hence of bargaining power. As Paulo says:

Market wages and conditions reflect the precarious social positions and sometimes utter desperation of those who typically perform them.

The point, of course, broadens. As Rick said, “all pay is, ultimately, a function of power.” It is trivially true that labour is the source of value, as this lockdown is reminding us. But how that value is distributed depends upon power. Your “skills” are only one element in your power: parlaying these into a decent income is another matter.

Power also lies behind the fact of bad employees. Big firms have a degree of monopoly power: they wouldn’t be profitable if they did not. Good employers use this power to share rents with workers. Bad ones, however, use their monopsony power to jack up the rate of exploitation.

What should be done about this? Some leftists think we need to make a moral case for paying key workers more and that we need to shame bad employers into improving.

Moral exhortation, however, might work sometimes but it is not enough. We do not reduce burglary or murder merely by appealing to criminals’ better nature. We use force as well. Similarly, we won’t abolish poverty pay and bad working conditions merely by asking nicely.

We must instead realize, as Marxists do, that material conditions matter. As the late great Norman Geras wrote in his essay Marxism and Moral Advocacy, ethical analysis and advocacy:

Need to be done with some thought for the social and material conditions of attaining any given ideals, the means of and agencies for attaining them, [and] the social interests and movements that can conceivably be coupled with or become attached to the ideals and imperatives in question.  

It is easy to see how we might abolish the material conditions that give rise to inequality, bad employers and poverty wages. Macroeconomic policy must be aimed at ensuring over-full employment. We need strong trades unions and a high citizens basic income to empower workers to reject bad pay and conditions. And government (and local authority) procurement should be used to encourage coops. 

Most social democrats would agree with this. We Marxists, however, have two doubts.

The first concerns how to get there. How do we mobilize the social movements and interests that would deliver a government committed to these, and weaken those that would prevent such a thing? 

The second is that these policies are only stepping stones, part of what Erik Olin Wright called an interstitial transformation (pdf). They will lead to a squeeze on profits. When this happened in the 70s, it led to a backlash against social democracy and to Thatcherism. The challenge is to ensure that it leads instead to socialistic forms of ownership. Historically, social democrats have resiled from this challenge.

This crisis has increased the salience of inequality and injustice. But there’s a huge distance between an issue being salient and it actually being properly addressed. We have little hope of closing this distance without a Marxian perspective.



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Economy

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From Torsten Slok’s excellent email links:

Jonathan Dingel and Brent Neiman: The places hardest hit by the virus are also the places where most jobs can be done at home.

Also the highest wage occupations are easiest to do at home. Good for GDP, bad for people with low wages.

New York Fed Weekly Economic Index

But it’s not just a fall, it’s also a radical shift in demand. A list of lots and lots of job openings, in all the places you’d guess. The instinct to just pay people to sit at home has downsides.

LA times via Marginal Revolution

They were ready to roll whenever disaster struck California: three 200-bed mobile hospitals that could be deployed to the scene of a crisis on flatbed trucks and provide advanced medical care to the injured and sick within 72 hours.

Each hospital would be the size of a football field, with a surgery ward, intensive care unit and X-ray equipment. Medical response teams would also have access to a massive stockpile of emergency supplies: 50 million N95 respirators, 2,400 portable ventilators and kits to set up 21,000 additional patient beds wherever they were needed.

…in 2011, the administration of a fiscally minded Democratic governor, Jerry Brown, who came into office facing a $26-billion deficit. And so, that year, the state cut off the money to store and maintain the stockpile of supplies and the mobile hospitals. 

… The annual savings for eliminating both programs? No more than $5.8 million per year, according to state budget records, a tiny fraction of the 2011 budget, which totaled $129 billion.

My emphasis. 50 million is a lot. A lesson in what government can do, and I hope will do next time.

Not to rub it in, but Gov. Brown did want to spend $80,000 million on a high speed train, all to lower the average global temperature by about 0.0001 (?) degree in the year 2100. Which is not a personal observation so much as an observation about the probabilities of various events that all of our elite intelligentsia assumed.

Amit Seru and Luigi Zingales want to save capitalism from the cares act. Besides the prospect of direct bailouts to big business, the Fed’s actions are truly gargantuan and under reported. Vastly oversimplifying,  the Fed is prepared to lend about $4 trillion dollars of newly printed money (really newly printed government debt) directly to businesses, and to backstop the entire non-bank financial system. Good or bad? Let us hope it doesn’t come to that.



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Economy

Cases and Deaths from Coronavirus Doubling Every Three Days Is Very Bad News Indeed

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I confess I am positively unmanned by the every-three-days doubling of reported cases and deaths here in the United States. I had thought that we would see true cases doubling every seven days. And back when reported cases started doubling every three days, I was encouraged, because I thought it meant that we were catching up on testing, and so getting closer to detecting the bulk of the symptomatic cases.

But now it looks like that was wrong: reported cases were doubling every three days because true cases were doubling every three days—that is what deaths tell us was happening to true cases up until three weeks ago. The lack of case curve-bending makes me think that testing is not improving. It makes me think that reported cases are doubling every three days because true cases are doubling every three days.

That means that the Trump administration has only 40% as much time to get its ass in gear as I thought it did.

And that means the chances it will are very very low indeed:

I must confess it had never occurred to me back when China shut down Wuhan that we would simply not test everyone who presented with symptoms—and then backtrace their contacts. It is really looking now as though China—even with its authoritarian blindness fumbling of the intitial response (see Zeynep Tufekci: https://www.theatlantic.com/technology/archive/2020/02/coronavirus-and-blindness-authoritarianism/606922/ is going to be studied in the future as a positive model of public health in the 21st century, while the Trump Administration’s reaction—currently on track as the worst in the world in handling coronavirus <https://www.evernote.com/l/AAFzPq9AJoFHFr_nrTPi1QyseD8WSAe0y00B/image.png>—will be studied in the future as a negative example: Brad DeLong: The Trump Administration’s Epic COVID-19 Failure https://www.bradford-delong.com/2020/03/the-trump-administrations-epic-covid-19-failure-project-syndicate.html: 'As officials at the US Centers for Disease Control and other public-health bodies surely must have recognized, asymptomatic transmission means that the standard method of quarantining symptomatic travelers when they cross national (or provincial) borders is insufficient. It also means that we have known for almost two months that we were playing a long game against the virus. With its spread more or less inevitable, the primary task was always to reduce the pace of community transmission as much as possible, so that health-care systems would not be overwhelmed before a vaccine could be developed, tested, and deployed. In the long game against a contagious virus, how to mitigate transmission is no secret. In Singapore, which has largely contained the outbreak within its borders, all travelers from abroad have been required to self-quarantine for 14 days, regardless of whether they have symptoms. In Japan, South Korea, and other countries, testing for COVID-19 has been conducted on a massive scale. These are the measures that responsible governments take. You test as many people as you can, and when you locate areas of community transmission, you lock them down. At the same time, you build a database of all those who have already developed immunity and thus may safely resume their normal routine…


#coronavirus #highlighted #orangehairedbaboons #publichealth #2020-03-27



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