My First (semi-)Fisking!

So. This started out as a response to a comment on a post at Left2Right, an excellent blog. However, this particular comment was not quite so excellent; and when I went to respond to it, I got a bit carried away. The response was much, much too long to post in the comments thread, so I decided to post it here instead. So, without futher ado:

Caligreen:

Why should wealthy conservatives or established agri-businessmen (anyone who says "farmers" has never driven through a few nearly county-sized corporate "farms" in say the Central Valley of California or Midwest) support planning when it most likely threatens to diminish their profits?

I don't know what to tell you; you're completely wrong that farmers dislike planning. Farmers love planning. Specifically, they love plans based on the claim that what we as a nation really need is to give lots of money to farmers. This is why we spend nearly $20 billion a year giving money to farmers—it's all in the plan! For a number of reasons, central planning tends to benefit the already powerful (who have access to the machinery of power) at the expense of the not-as-powerful (see Kelo v City of New London; Pork-Barrel Spending; and Welfare, Corporate). Giving the government more power is in many ways asking for trouble.

The agri biz (or oil) and its party the GOP are not for planning any more than they are for restrictions on construction or real estate prices.

Excuse me? The GOP not in favor of government planning? I'll have to go tell my friends—they've spent Bush's entire presidency complaining about how inclined he is to engage in large handouts, economic protectionism, and all-around corporate welfare. You're certainly right that the Republicans (much like the Democrats) are mostly in bed with corporate special interests. That's why I don't vote for them.

Yet if there are in some OK town 10,000 tenants who want (or who would at least benefit from) rent control and only 50 landlords opposed to it, perhaps a vote might be in order.

I agree it may appear that rent control benefits the poor, but that happens in the short term only, at best. Rents are actually a perfect example of my argument, which you kindly quoted. When rents get really high, that's a strong signal to landlords and construction workers that people want housing in a given area; the prices they're willing to pay tells landlords how much they want housing. If the price is enough to cover the costs of providing housing (including the purchase/construction of new housing units), landlords have an incentive to provide that housing.

If the rent isn't enough to cover the costs of providing housing, that tells our prospective landlord that society values those resources more for doing something else. It may be worth $10000 a year to people to get the housing those resources could produce; but maybe it's worth $11000 for people to get the food, clothes, computers, and whatever-else those same resources could produce if they're not used for housing. So the landlord profits if and only if he's using those resources for a use that society values more than it values the next-best use.

Rent controls screw up this dynamic. If, for instance, the commission in charge of setting rents says you can charge $9000 a year, not enough houses get built. Landlords think people only have $9000 of desire for housing, when they actually have $10000 of desire. Housing that costs $9500 a year to provide doesn't get built, even though it would benefit both the landlord and the people. Similarly, if rents get set at $11000 a year, landlords think people want housing more than they actually do. Landlords flock to the city and build lots of houses, only to find that no one wants to live there and they've just wasted a ton of resources that could have been better spent.

"Ah, but that's only the landlords' filthy profit motive! If we put the city in charge of deciding how much housing to produce, we can solve all that and still charge a fair rate!" That's nice, but that's exactly the claim Mises and Hayek refuted (convincingly enough that the socialists of their day had to fundamentally change their arguments—the critique was so powerful that it couldn't be ignored). The number of factors that go in to deciding how much housing to build is unimaginably vast. How much housing do people want? How much glass, brick, steel, copper wiring, insulation, plastic, etc. should we use in each house? What are all the other things those materials could be used for, and how much do people want each of those things? How could anyone, or any group, process that much information?

Prices. When we set things out in a market, people bid on stuff to show how much they want it; in general, the more use you can get out of something, and therefore the more valuable it is to you, the more you're willing to pay for it. Resources get sent to the places where they produce the most value to society as a whole, because that's where people are willing to pay most for them.

Oh, and that adjustment that the socialists of von Mises' day made? They agreed that a planning commission couldn't work on its own, and that a socialist state would have to regulate its economy by setting prices, and raising and lowering prices to equate supply and demand, just like people do in a market. Only, really inefficiently, because the central planning commission has to keep track of all the prices on everything, not just the prices on the relatively few things any one corporation sells, and prices just aren't adjusted fast enough to keep everythign working smoothly. But even this system it works, it's not really a planned economy any more: it's a market economy with only one employer—the State—and only one producer—the State. Oh, and this one giant company also owns all the guns. Good luck with that one. (A fuller discussion of these issues can be found here).

Vegas too: nothin' but effectiveness there

Vegas is actually great, because it's one of the few places in the world that actually gives people what they want. That's how they make all that money. Of course, it's also very instructive, because when you see what people want, you learn that most of it is really, really stupid. But that doesn't mean they don't want it. And most of them think my desire to spend an hour writing a critique of central planning theory in response to some guy online is really, really dumb. I figure I'll let them do what I think is dumb if they'll let me do what they think is dumb. If you want to put someone in charge of what people are allowed to like and do, you're walking awfully far down the Road to Serfdom.

( of course the water may be dried up in a few years, except for millionaires who might have hoarded it for their golf courses).

Yeah, the West has lots of problems with water. They seem to be consuming way more than they should. Wanna guess what generally causes that?

Who collected all the data to build Malibu's $1 million a half acre enclave over the last 30 years? There's little to no democracy or "everyone putting in data" in the LA or SF housing markets: there's some real rich guys and brokers who "got in early" as they say who now parcel the land out for millions to a few
ueberrich entertainment or professionals.

Yeah, houses in some places sure cost a lot, don't they? There are a few reasons for this. I can throw back at you the fact that governments in those areas generally restrict the number of homes that can be built there, artifically restricting the supply and driving up the values of the houses already built (this benefits people who own houses there already—and thus vote—at the expense of people who don't, and so don't). This is another example of how housing messes with the market and keeps people from getting what they want.

But more fundamentally, prices are that high because lots of people really want to live there. People will only a buy million-dollar house if it's worth a million dollars to them to live there. So this is another good example: high prices signal that people want to live there a lot. The prices first of all, make sure that the people who most want to live there get to (I might want to live there, too, but only enough to spend $200,000 on a house. The guy willing to spend $1,000,000 values living there more). The high prices also signal that finding ways either to let more people live there, or to let people live in areas that resemble those areas, is a good idea—it will fill a desire that lots of people have that can't be met yet. Thanks for all the help; I'm way too lazy to dig up good examples like that on my own.

Oh, and one last thing: your post (especially the first paragraph) is a perfect example of what Arnold Kling calls a "Type M" argument. Rather than responding substantively to my arguments, you effectively accuse me of being a shill for the wealthy, and lying about both my motivations and the quality of my arguments. This is stupid both because you have no way of knowing what my actual motivations are, and because my arguments are equally good whether or not I'm advancing them in a bid to seize more wealth for myself. I happen to think that a relatively more market-oriented society will benefit me. I also think it will benefit most of the readers of this blog, and of Left2Right; and I think it will benefit most members of society generally. If this be "self-interest and protectionism on the part of the of the wealthy," make the most of it.

Update: the Left2Right site moderator has determined that Mr. Caligreen, to whom I was responding, is a troll, and all of his comments were deleted. The link that previously linked to his comment now links to the thread on which it appeared (which is well worth reading; most of the people over there are sensible, and the conversation was extremely interesting). However, one of his comments, at least, is preserved in near-entirety: I quoted almost his entire post in this response.

The Wizard of Oz as Modern Mythology

I really liked the play Wicked when I saw it last Christmas*, so I was excited to read the original book. I did think it was interesting, but it was very different from the play—so much so that it seems arguable whether they're telling the same story.

I think this is another instance of a phenomenon I've been interested in lately, especially after the third Star Wars movie came out. In the ancient (Greek and Roman) world, virtually all fiction was retelling of the same old stories. The measure of an artist's craft was his ability to take the essential kernel of an old story or myth and rework it into something beautiful. Originality wasn't really prized.

The same held true, though perhaps to a lesser degree, for much of the Middle Ages. Artists were largely expected to improvise on old themes and stories, not create new ones. One effect of this setup was that many old stories have several versions. If you do any study of Greek mythology (or fairy tales), especially, you learn that there was no "accepted" version of most myths; each author reworked the details to suit his purposes and make the point he wanted to make.

But our society has done an almost complete 180. The traits we value most in artists are originality and authenticity—I know several people who like the music in The Phantom of the Opera, but object to the musical because Webber borrowed a lot from Puccini—and therefore, wasn't original; so the fact that the music is good, in some sense, "doesn't count."

But back to Wicked. The Wizard of Oz was originally written as an American fairy tale; Wicked plays off of this, and acts as a loose reworking of the same source material. In the tradition of cultural mythology, it appropriates cool ideas and uses them for its own purposes. Of course, Wicked isn't the first time that's been done; I haven't even seen the movie (shameful, I know), and I know that it changed some arguably important details*. But Wicked involves much more drastic alterations to the basic structure of the story.

The tension and meaning of Wicked rides largely on its derivation from a cultural force. The whole point of the work is to take the fourth-greatest movie villain of all time and make the reader sympathize with her: sympathizing with someone seen as so profoundly evil is meant to make the reader reexamine his conception of good and evil. For similar reasons, no character really comes out of the book looking wholly good or wholly evil (though Fiyero and the Wizard come close): the book is really about the thinness and blurriness of the line between good and evil. Casting a notorious villain as the protagonist forces the reader to confront his preconceptions head-on.

But Wicked the musical performs the same trick again, adopting the framework and basic characters of the book to tell its own story with its own themes and meanings. Some of the themes are closely shared between the musical and the book: in neither work is the line between right and wrong clearly drawn, and both engage in extensive political commentary. But the book focuses almost exclusively on the ethical issues; politics is mostly used as a tool to explore characters' views on good and evil. The Wizard's character is revealed by his oppression and tyranny; Nessa's by her fundamentalism; Glinda's and Fiyero's by their disengagement. In the play politics takes a much more central role.

The play also seems to have a much clearer opinion on what courses of action are right. The theme of "Defying Gravity" is determination: Elphaba knows that the Wizard is wrong, and she'll resist him despite the personal cost. The book presents a much more nuanced view of her resistance, and focuses much more on collateral damage. Elphaba's intial determination to take down the Wizard hurts lots of people, but doesn't seem to accomplish anything; and while the Wizard is obviously wrong, Elphaba probably is as well. Even though the book's end is reasonably right and happy, you can't blame it on any of the characters, because very few of them ever seem to act at all sensibly or nobly.

In the end, I think I prefer the musical. Both works are tragic, but the tragedy of the play has much more nobility to it, and Elphaba in "Defying Gravity" is one of the best depictions of the highest and best in man—his nobility and conviction, his dedication to justice—that I've ever seen. The book really doesn't have any characters or moments that could be called "noble." The book is the story of a confused woman stumbling through a world, trying to figure out what to do and how to relate to others. The play is the story of a noble woman who resists tyranny and injustice, even though she hasn't the power to stand up to it herself. And at the end, she's successful: the Wizard is dethroned, and Oz is returned to peace.

And perhaps this is the real benefit of being able to retell stories. Every reader can recast the details of the story to mean what he needs it to mean, and to let it reflect his own desires and values. Any story that can reflect the disparate desires of very different people is a powerful cultural force. And it allows all of us to get what we want, and need, from our literature.

*Incidentally, I was listening to the soundtrack earlier today, and I swear that it gets better every time I listen to it. Even more randomly, I think this is really, majorly, supremely cool. I want it!

* In the book, Dorothy's shoes were silver. This seems totally irrelevant, unless you know that several people have argued, somewhat convincingly, that the original Wizard was a Populist allegory, with the Yellow Brick Road representing gold currency and the silver shoes representing a shift to the silver standard that the Populists were pushing for. If they're right, changing the color of the shoes actually gutted the entire work.

Good Post on Global Warming at Volokh

I don't really have much to add to this; Professor Zywicki pretty much nails it. The precautionary principle is a virtually useless guide, as the environmentalists typically formulate it: it doesn't tell us what we should precautionate against, and there's no guarantee that acting bears any more risk than not acting. The kind of action the Greens generally demand often has potentially severe economic consequences (therefore we shouldn't take these actions. The chance of totally derailing our economy by implementing silly standards is too great to ignore; the precautionary princple demands that we not risk it. So there). Further, if we don't really understand what we're doing—and the climate system is so complicated that no one has any legitimate claim to understand what we're doing—we could easily exacerbate the harm we're trying to prevent.

The real problem with most Greens' analysis is a complete failure to weigh the costs and benefits of different courses of action (this doesn't apply to all environmentalists. There's a big difference between people who want to protect the environment and conserve resources effectively and people who buy into the Green ideology). In many cases, they see protecting the environment not as an economic tradeoff, but as a moral imperative. If you're worried about the trees-in-and-of-themselves, then it doesn't matter what the economic benefits of logging are. If you're trying to build the kind of world that most people would want to live in, it matters very much.

The worst example of this kind of thinking is recycling: in many cases recycling is far, far more wasteful than just throwing the stuff away, but many people seem to possess a complete inability to evaluate it this way. When I've pointed this out to people, they've typically either refused to believe me or claimed that we should encourage recycling even if it's bad for the environment and the economy, because it promotes good attitudes. I suppose it does, if by "good attitudes" you mean "complete disregard of facts in service of ideology." But I doubt that's what most people mean.

Okay, I take it back. I guess I did have something to add.

Speaking of Consumerism...

I want one.

The Virtue of Consumerism

I thought that this article at Tech Central Station (thanks to Bret, who blogs here) was really interesting. William Lewis and the McKinsey Global Institute did a huge study of wealth and productivity around the world, and they came up with some interesting, and often counterintuitive results. I found three particularly interesting:

First, Mr. Lewis found that education levels really don't matter to productivity—or, at least, they're not a major factor. Back in the early '90s when we were panicking about Japan kicking our collective ass at manufacturing, we thought it was because Japanese workers were so much better educated. Then the Japanese companies opened up factories over here with American workers, and they got results that were nearly as good as the results they got in Japan with Japanese workers. Conversely, American companies using immigrant Mexican labor get much better results than Mexican companies do:

We compared the construction industry in the US to construction in Brazil and found that in Houston, the US industry was using Mexican agriculture workers who were illiterate and didn't speak English. So they were not any different than the agricultural workers who were building similar high rises say in Sao Palo. And yet they were working at four times the productivity.

So far more important than the workers' education level is the structure and management of the company.

Second, the Institute concluded that much of America's wealth advantage stems from the presence of "big box stores" like Wal-Mart. The wealth of a country is largely determined by its citizens' productivity; most of a country's economy—especially in a developed country—is concentrated in service and retail industries. These industries aren't glamorous, don't generally get focused on, and are often nearly invisible; but an advantage in retail productivity, say, is a huge advantage in overall productivity. The US trails other nations, especially Japan, in manufacturing productivity, which gets written about a lot. But we have a huge advantage in retail, because

innovations have occurred in retailing and new formats of much higher productivity then these former formats have developed. The most obvious being the so called big box epitomized by Wal-Mart, which has productivity something like five times the productivity of a normal general store of the 1950's.

We've taken advantage of these innovations; other countries have not.

But the most interesting part, to me, was the reason most other countries haven't taken advantage of these innovations. The obvious reason is the old public choice dilemma: big box stores and the like—most of the innovations that have increased the productivity of service and retail industries—hurt consumers and help established producers/retailers (Mom-and-Pop stores), and the producers have a much more concentrated lobby. But the fact remains that somethign happened here in America; we have an environment much friendlier to these innovations, and much more consumer-friendly in general. Mr. Lewis says that this happened largely because we've always been a nation of consumers.

What he showed was that at the time of the [American] revolution, consumerism exploded in the US. And it was associated with the fundamental notions of individual rights. That prior to that, at least in the feudal societies of Europe, consumption was viewed as a luxury to which only the land owning class was entitled. And everybody else was entitled to subsistence -- enough food and enough shelter to survive and that was it. And at the time of the revolution, because the revolution was so rooted in ideas of individual rights and equality of opportunity and equality of desire and equality of demand, everybody said, 'why not me?'

So you suddenly had a few million farmers beginning to view themselves as consumers.

Because we have such a deeply-rooted history of consumption, we've taken steps to preserve an environment where consumption can occur—where consumers have power to a much greater extent than they do anywhere in Europe. I found this very interesting, because people often complain about how damnably materialistic Americans are. And if the Global Institute and Mr. Lewis are right, our consumerism is actually what's made us as rich and powerful as we are--it's the engine that makes our economy strong.

So next time you hear someone complain about how darned materialistic and immoral we Americans are, you know what to tell him: "Sure, we're materialistic; and it's a damned good thing."

Hey There!

Welcome to my new blog. I'm hoping that this will be a place where I can have a productive discussion with interesting people on important (and sometimes not-so-important) topics. But based on my track record so far, I'm afraid it will break down into random bickering and people telling each other how stupid they are. I really, really hope I can avoid that.

But I have to confess that I'm kind of stuck. I feel like my first post should sort of explain the theme of the blog, and what I want to do with it, and what sort of issues I'll be discussing. Problem is, this blog doesn't really have a theme--it's really just a place for me to talk about stuff that I find interesting. In the past, when I've come up with an idea that seems cool, or read an interesting article online, I've just grabbed my nearest friend and harangued him about it. Often this resulted in my instant messaging a friend at two in the morning and asking him to read a fifteen-page economics paper so we could talk about it. Some of them were surprisingly tolerant (thanks again, Steph, if you're out there). But most of them weren't up to reading the stuff when they were half-asleep, and sometimes I can't find anyone to talk to.

So The Echo Chamber was born. This way, I can be much more efficient--I can put down my thoughts when they occur to me, then inflict them on all [three] of my friends, instead of just one! More seriously, this will give me a place to work out my thoughts, and with luck I'll receive decent feedback.

Unfortunately, this still doesn't leave me with a way of opening up with a post on the blog's theme, because I still don't have one. As a sort of solution, I'm going to start off soon with a few posts on completely random topics, just so no one thinks that I'm going to stay on any sort of topic here.

Oh--there is one thing I can say to help explain what this blog's going to be like. Look through this post, and count up the number of times I've used the word "I" or "me." Now count the number of times I've used the word "you."

Yep.