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Archive for October 13th, 2008

“The financial crisis is not the crisis of capitalism. It is the crisis of a system that has distanced itself from the most fundamental values of capitalism, which betrayed the spirit of capitalism.”

Nicolas Sarkozy

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Radley Balko points out the moral and intellectual bankruptcy of the war on drugs:

We’re told that drug war is a moral imperative because, in the words of Walters himself, “dangerous drugs damage [children’s] lives and limit their futures.”  But like most temperance zealots, Walters measures success not by actual lives wrecked or ended prematurely, but merely by how many people are and aren’t getting high.

Switching from the “drugs ruin lives” justification for the drug war itself to “how many people are getting high” when measuring the same drug war’s effectiveness, then, hides a more important statistic:  How many people have had their lives ruined and futures limited by the drug war?  The vast majority of the 873,000 people arrested for marijuana offenses last year, for example, likely had more damage done to their lives by the prohibition of marijuana than could ever be done by the drug itself.

Such is why drug warriors like William Bennett, Karen Tandy, and Walters can assert with a straight face that alcohol prohibition was, also, a “success.” Sure, the crime rate spiked, alcohol hospitalizations soared, and corruption and contempt for the rule of law was rampant.  But fewer people swallowed down less demon rum.  So, score one for social engineering.

Sure, deaths from drug overdose have jumped 70 percent, and more than doubled among young people.  But fewer people are smoking pot.  And that means we’re winning.

As they say, if you repeat a lie enough times, it becomes true. Bennett, Tandy and Walters are proof of that.

But surely then, if you repeat a truth enough times, as Radley, I and so many other try to do, it should make people listen as well? Isn’t that the least that fairness owes us?

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Paul Krugman, Neo-Keynesian economist and controversial NY Times columnist, has won this years Nobel prize in economics (or more accurately the “Nobel Memorial Prize in Economic Sciences”).

A round-up of reactions follows.

Jonathan Adler writes at Volokh:

This morning, the 2008 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel was awarded to Princeton economist Paul Krugman “for his analysis of trade patterns and location of economic activity.” The award was bestowed for his academic work — which many have suggested was Nobel-worthy for some time — not his political commentary, though the latter may have played a role. […] [I] want to make clear that I believe Krugman’s Nobel is well-deserved. He is clearly among the most important economists of his generation.

Tyler Cowen gives a great summary of Krugman’s work at Marginal Revolution:

Krugman is very well known for his work on strategic trade theory, as it is now called.  Building on ideas from Dixit, Helpman, and others, he showed how increasing returns could imply a possible role for welfare-improving protectionism.  Krugman, however, insisted that he did not in practice favor protectionism; it is difficult for policymakers to fine tune the relevant variables.  Boeing vs. Airbus is perhaps a simple example of the argument.  If a government can subsidize the home firm to be a market leader, the subsidizing country can come out ahead through the mechanism of capturing the gains from increasing returns to scale. […] I am most fond of Krugman’s pieces on economic geography, in particular on cities and the economic rationales for clustering.  He almost single-handedly resurrected the importance of “location theory,” an all-important but previously neglected branch of economics.

Libertarian/Anarcho-Capitalist economist Bryan Caplan writes, also at Marginal Revolution:

There are lots of good reasons to be annoyed with Paul Krugman. (Like here, here, and here). But as a cock-eyed optimist, I’m very happy to have him around. Think about it: The world’s most famous left-wing economist:

1. Blames European unemployment on labor market regulations that hold wages above the market-clearing level. (The Accidental Theorist, Part 1)

2. Publicly and articulately advocates free trade without hemming or hawing. (Pop Internationalism)

3. Identifies anti-globalization activists as the enemies of the world’s poor. (The Accidental Theorist, Part 3)

4. Titles an essay “In Praise of Cheap Labor: Bad Jobs at Bad Wages Are Better than No Jobs at All” (The Accidental Theorist, Part 3)

5. Points out that if you oppose Big Government, you should favor cutting Social Security, Medicare, and other popular programs. (“The Lost Fig Leaf”) Sure, he’s hoping to scare us away from libertarian rhetoric, but there’s no use running away from the truth.

I can’t imagine Paul Samuelson doing any of the above, much less Galbraith. At least in economics, the intellectual climate hasn’t been as good as it is now for a century.

Daniel Davies is happy:

I can’t help thinking that this is actually Krugman’s reward for being the public voice of mainstream sensible Keynesianism for the last fifteen years, starting with the use of the liquidity trap to explain the Japanese slump, going through his prediction of the Asian crises and onward to today. In which case, well done the Nobel [see note 1 again] committee – Krugman’s NYT column has been more use to the public standing of economists than more or less anything published in the journals.

For the record, I don’t much agree with Krugman’s overall poltical/economic philosophy. (No surprises here, for I am a libertarian and he a Neo-Keynesian.) I also think that his NY Times column is bad, especially when he delves into politics. However, while I have not read any of his academic papers, I see no reason to suspect that the prize is not well-deserved. The Econ Nobel is one area where winners can hold radically different views as long as their papers are worthy, and Krugman’s award is a continuation of that tradition. So, congratulations.

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