Tag Archives: Foundation for Economic Education

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Remembering the Man Who Turned Numbers Into Hope – Article by Steven Horwitz and Sarah Skwire

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Categories: Economics, Education, Tags: , , , , , , , , ,

The New Renaissance HatSteven Horwitz and Sarah Skwire
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After the spate of celebrities who died in 2016, the death of a Swedish professor of international health might not seem very newsworthy. However, Hans Rosling, who died of pancreatic cancer on February 7th, was no ordinary or obscure professor.

The story of his life and career can be found both at Wikipedia and in this marvelous Nature profile. What those sources cannot quite convey is Rosling’s importance as a role model for intellectual honesty, personal warmth and charisma, and a willingness to go where the facts took him, regardless of whether those facts adhered to any simplistic political narrative of humanity’s past and future. Both Rosling’s intellectual fearlessness and the substance of his work have importance for those who care about human freedom and progress.

Intellect and Humanity

But it isn’t just the content of Rosling’s work that matters. He was an amazing rhetorician. He had a unique ability to use and present data in easy to understand and visually appealing ways that were very effective at conveying an argument. He also was able to think creatively about the linkages among the various causes of wealth and the improvements they made in human well-being. His natural storytelling ability gave him the capacity to put those complex historical factors into narratives that not only got the history right, but did so in a way that appealed to our shared humanity.

All of these skills are on display in his two most famous videos, both of which impart lessons in presenting ideas and interpretations of data that classical liberals will find very useful.

Underlying much of Rosling’s work as a public intellectual was a concern with how we enable all of humanity to share in the health and wealth that has come to characterize the Western world.

With his background in health and demographics, Rosling was interested in the factors that led to the rising health and longevity of the West. First, of course, he had to document just how much better things had become in the West, then he had to explore the causes.

Presenting the raw data about the improvement of the West was the centerpiece of his BBC video “200 Years, 200 Countries, 4 Minutes.” Using real-time data visualization techniques, he shows how every country in the world was poor and sick 200 years ago and then showed the path by which so many countries became wealthy and healthy. There is no better visualization of the progress of humanity than this one.

For those of us who work with students, this video gives us the opportunity to talk about the factors that made that growth happen, including the role of liberal institutions and the rising moral status of the individual in that process. It is a great complement to the work of Deirdre McCloskey.

The video also provides a way to talk about global inequality. What is clear from the visualization of the data is that 200 years ago, countries were far more equal than now, but they were equally poor.

It’s true that the gap between rich and poor countries is greater now than back then, but everyone has improved their absolute position. And two of the countries that have improved the most are two of the most populous: China and India. Rosling’s presentation opens up countless useful discussions of the importance of economic growth for increases in life expectancy, as well as what exactly concerns us about growing inequality.

As he concludes, the task before us now is to figure out how to bring the rest of the world up to where the West is. Though he does not discuss it, the economic evidence is clear that those countries that have experienced the most growth, and therefore the biggest increases in longevity and other demographic measures of well-being, are those that have the freest economies. By giving us the data, Rosling enables classical liberals to engage the conversation about the “why” and “how” of human betterment.

Inspirational ‘Edutainer’

But our favorite video of Rosling’s is definitely “The Magic Washing Machine.” Here Rosling uses the example of the washing machine to talk about economic growth and its ability to transform human lives for the better.

Rosling’s focus is on the way the washing machine is an indicator of a population that has grown wealthy enough not only to buy such machines, but also to provide the electricity to power them. The washing machine is a particularly valuable machine since it relieves most of the physical burden of one of the most onerous tasks of the household, and one that has historically fallen entirely to women.

No one who has seen the video can forget the story of Rosling’s grandmother pulling up a chair in front of the new washing machine for the sheer joy of sitting and watching while the clothes spin. Her excitement becomes even more poignant when one considers that this must have been the first time in her life when she was able to sit while laundry was done, instead of standing over a tub of hot water and soap.

Rosling points out, in a moment of calling his fellow progressives to task, that while many of his students are proud of biking to class instead of driving, none of them do their wash by hand. That chore, though green, is simply too onerous for most moderns to take on. He then goes on to discuss how we have to find ways to create the energy needed as billions of people cross the “wash line” and start to demand washing machines.

The video ends with him reaching into the washing machine and pulling out the thing that the machine really made possible:  books. The washing machine gave his mother time to read and to develop herself, as well as to read to young Hans and boost his education as well.

The visual image of putting clothes into a washing machine and pulling out books in exchange captures all that is good about economic growth in a succinct and unforgettable way. Rosling concludes the video with a heart-felt roll call of gratitude to industrialization and development that has been known to reduce free market economists to tears.

What Rosling does in that video is to effectively communicate what classical liberals see as the real story of economic growth. He gets us to see how economic growth, driven by markets, has enabled women to live more liberated lives. Classical liberals can talk endlessly about the data, but until we talk effectively about the way in which industrialization and markets have made it possible for women (and others) to be freed from drudgery that was literally back-breaking, we cannot win the war on the market.

Thank You

Bastiat said that “The worst thing that can happen to a good cause is, not to be skillfully attacked, but to be ineptly defended.” Hans Rosling’s work is the best possible example of the best kind of defense of a good cause. He was a model and an inspiration.

Rosling ends “The Magic Washing Machine” by saying “Thank you industrialization. Thank you steel mill. Thank you power station. And thank you chemical processing industry that gave us time to read books.”

We say, “Thank you, Dr. Rosling. Thank you, data visualization. Thank you TED talks. And thank you, Mrs. Rosling, for buying a washing machine and reading to your son.” We are richer for the work he did. We are poorer for his loss.

Steven Horwitz is the Charles A. Dana Professor of Economics at St. Lawrence University and the author of Hayek’s Modern Family: Classical Liberalism and the Evolution of Social Institutions. He is spending the 2016-17 academic year as a Visiting Scholar at the John H. Schnatter Institute for Entrepreneurship and Free Enterprise at Ball State University.

He is a member of the FEE Faculty Network.

Sarah Skwire is the Literary Editor of FEE.org and a senior fellow at Liberty Fund, Inc. She is a poet and author of the writing textbook Writing with a Thesis. She is a member of the FEE Faculty Network. Email

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution 4.0 International License, which requires that credit be given to the author. Read the original article.

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Banning Refugees Is Cowardice, Not Vigilance – Article by Sean J. Rosenthal

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Categories: Culture, Justice, Politics, Tags: , , , , , , , , , , , , , , , , , ,

The New Renaissance HatSean J. Rosenthal
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Donald Trump’s ban on people of certain nationalities entering the United States – now buffeted about by court orders, clarifications, and defiance – is a systematic rejection of the principle of Freedom of Movement with no impetus other than unacceptable, widespread cowardice.

The September 11 terrorist attacks cannot excuse such a grievous violation of rights. Terrorism is domestically a statistically trivial threat. The countries banned by Trump had little relation to 9/11, and the people denied entry to the United States are just as harmless (if not more so) than the average American. Neither reasons nor sudden trauma justify Trump’s actions – only cowardice.

In opposition to courageous principles like Freedom of Movement, discretion is courage’s institutional nemesis. Fear-induced discretion splits principles like scientists split atoms, producing explosively dangerous results.

Except to the extent courts stop him, Trump has undermined Freedom of Movement through an order to keep out people from Middle Eastern countries designated as countries of concern by the Obama administration.

Refugees already thoroughly vetted as safe, including business owners and participants in the Iraq war who have lived for years in the United States – all denied entry, all forced to beg for the government to wisely exercise its discretion in the face of an arbitrary burden.

Trump’s immigration policies are unwise and unjust. More tellingly, Trump’s restrictions on movement suffer more fully from another sin – a lack of courage.

Individual or Systemic Courage

At an individual level, it’s true that courage tends to be an overrated virtue. The image of “courageous” people often looks like warriors courting danger guns-blazing because they lacked the patience and ingenuity to find better solutions. Thus, courage is for the warrior fighting to the death.

Among non-violent “courageous” acts, contrarians who “stand up for what they believe in” often get courage points for being edgy or brutalist, as if people deserve praise for offering unconvincing evidence against social pressure. Generally, courage tends to be praised relative to the inactions of other people, forgetting that people often avoid doing certain things because they should not be done.

Moreover, fear is often unreasonable in ways immune to argument, making courage a weak appeal. For instance, traveling by planes is much safer than traveling by cars, but planes paralyze people in ways that statistics cannot cure because the fear of flying is a feeling, not a fact.

Similarly, terrorism is a statistically trivial cause of death in the United States, even including 9/11 and especially excluding that outlier, but terrorism causes widespread fears orders of magnitudes more crippling than the actual violence. To give a personal example, I have a totally unreasonable aversion to walking over storm drains and similar parts of sidewalks that leads me to walk around them.

Condemning fear rarely assuages it, and demanding courage rarely emboldens, because personality, ingrained perceptions and idiosyncrasies matter more than reasons for explaining fear and courage.

The Courage to be Free

Nevertheless, good institutions require courage.

For example, Freedom of Speech is a courageous principle. Freedom of Speech allows people to profess the wise and unwise, just and unjust, beautiful and vulgar. The dangers of the government deciding which speech falls into which categories justifies overriding particularized fears because of the courageous belief that free people can generally promote a better, more beautiful world through discourse. The courage required to permit others to speak, not knowing what they may say, far exceeds the courage of merely saying something unpopular.

Historically, fear commonly led to censorship. The Athenians sinned against philosophy by executing Socrates for corrupting the young, a fear of the influence of discourse. Similarly, the Pope compiled an Index of banned books and sought to censor them, fearful of the influential power of written words. Fear governed the world’s old order.

After weighing the liberating potential and corrupting dangers of pamphlets, America rejected the old order and institutionalized courage as common sense. Freedom of speech is the courage of a brave new world.

(To digress briefly into unimportant news stories, you should not punch Nazis merely for expressing their views. Only cowards without such faith in discourse and alternative peaceful methods would do so – and the cowardly types who have forgotten Ruby Ridge.)

Similarly, the Bill of Rights institutionalizes one courageous principle after another. The Bill of Rights trusts people with guns, protects potential criminals through warrants and other procedures, and generally imposes substantial burdens on the government before it can override individual freedoms, all because of the courageous general faith in free people.

The Freedom of Movement

Along with the above principles, the United States has a long history of embracing the courageous principle of Freedom of Movement.

America was formed by immigrants who courageously journeyed thousands of miles to leave European persecution and seek wealth and freedom. Without passports or other border restrictions, America promoted friendship and growth across state boundaries by allowing Freedom of Movement. Though the Constitution does not explicitly include such a right, the Supreme Court has correctly recognized that people have the right to travel freely between states.

Freedom of Movement between states is such a strong principle that nobody even considers imposing border restrictions. People from St. Louis, Baltimore, Detroit, and other American cities that rank among the world’s most dangerous can freely traverse anywhere else in America without legal barriers, even as national borders prevent the impoverished immigrants of safer foreign cities from doing the same.

Internationally, America also used to embrace such a broad principle. From the late 1700s until the late 1800s, though citizenship was unconscionably selective, the federal government allowed all foreigners to enter the United States – and, with the understanding that the naturalization clause only gave Congress control over citizenship, had no choice but to do so. To celebrate a century of such Freedom of Movement, France gifted America the statue of liberty with a famous poem dedicated to such American courage.

Unfortunately, around the same time, the federal government’s fear of the Chinese led it to pass the Chinese Exclusion Act, and the Supreme Court mistakenly upheld it. Thus, Freedom of Movement split from a courageous principle to a discretionary privilege, literally allowing fear to determine the borders of freedom.

Outside the context of the Chinese, such discretion remained largely unexercised for decades. Unencumbered by national borders, by World War I, two million Jews successfully fled Russia’s pogroms to freedom and safety in America.

However, by the 1920s, the dangers of discretionary power took hold, and the United States severely reduced legal immigration with its national origin quota systems. By World War II, the United States and the whole world had rejected immigrants.

The greatest victims of Freedom of Movement’s demise were the Jews that the world rejected at the Evian Conference and thereafter. Americans widely opposed Jewish refugees out of fear that some of them may secretly be communists or Nazis.

Unlike the millions saved by a courageous embrace of Freedom of Movement through World War I, fear undermined this principle and led to the death of millions during the Holocaust in World War II.

Refugees and Skittles

Without the courageous principle of Freedom of Movement, people’s fears determine and limit how many refugees can escape despotism and warfare. Just as fear trapped Jewish refugees during World War II, such fear traps Syrian refugees now.

Emphasizing the underlying fear, a thought experiment that opponents of Syrian refugees commonly ask goes something like: imagine you have a bowl of 1,000 skittles, only ten of which are poisonous. Would you eat the skittles? If not, then you understand why Syrian refugees must be so carefully restricted. Most alleged refugees might not be dangerous, but the government cannot know which ones are harmless and must prevent them all from entering to stop poison from seeping over our borders.

In reply to this thought experiment, most defenders of refugees argue over the numbers. Statistically, as mentioned above, refugees are vetted carefully and virtually all harmless, and almost none have been murderers or terrorists. Moreover, basically all studies on immigrants (legal, illegal, refugees, etc.) show that immigrants are less likely to commit violent crimes than typical Americans. So, if you increase the bowl size to like 3,200,000 skittles with 20 poisonous, then yeah, the chance is justified.

In contrast to this response, I do not think the exact proportion matters much because of the agreement that almost all the refugees should ideally be allowed to enter. The skittles thought experiment is the coward’s game for people lacking the courage to accept Freedom of Movement as a principle.

Courageous principles sometimes allow bad outcomes. Freedom of speech allows for some noxious ideas to spread. Gun rights allow for some bad people to more easily engage in violence. Requirements for warrants allow for some criminals to hide their crimes. And freedom of movement allows for some bad people to travel where they can do harm.

Such courageous principles do not create perfect worlds. They create structures in which people have the freedom to shape the world, for better or worse – with better usually winning. Depriving the vast majority of people’s freedom to prevent a small minority from spreading evil impoverishes and threatens everybody.

Courageous Americans who embrace the existing dangers of speech, guns, and warrants should also similarly embrace the dangers of movement. Fear-induced discretionary restrictions on freedom of movement mean 99 ash-ridden Syrian children suffering from poverty, warfare, and death for the chance of maybe keeping out one bad person.

In sum, to paraphrase Shakespeare, cowards kill many times before their deaths; the valiant’s tastes let others live.

Thus, cowards ask how many poisonous skittles might sneak in with a broad rainbow and fear the tiny shadows that enter with the radiant light. In contrast, the valiant ask how many Anne Franks will die if we fear these tiny shadows and instead courageously opens the golden door for the rainbow, realizing today’s Anne Franks are in Syria.

Sean J. Rosenthal is attorney in New York.

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution 4.0 International License, which requires that credit be given to the author. Read the original article.

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Must We Pick a Side? – Article by Jeffrey A. Tucker

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The New Renaissance HatJeffrey A. Tucker
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The wildly contentious election of 2016 seems to have inculcated certain habits of mind. We are tempted to believe that our role as citizens is like that of a sports fan. We need to choose a team and stick with it, no matter what. Our team needs us.If we lend our voices in support of the other guy, we are betraying our team. The enemy of my enemy is my friend. My friend is imperfect, but to admit this publicly is to weaken our side. It’s a test of loyalty. Therefore bring out the face paint, the jerseys, and the Vuvuzelas, and let’s fight, fight, fight!

Every day, the media exploits this model, giving us combat spectacles of left vs. right, party vs. party, this person vs. that person. This drives ratings, which is evidence that people find it intriguing. It allows spectators to participate by shouting at the TV, yelling at the radio, posting angrily on social media, having sub-tweet wars, and so on. We mimic what we see in these venues and even begin to talk like the vituperative and viral voices that fill up our feeds.

Go Team!

That turned on a light for me. I realized that there is something insidious about any approach that requires you to shut off the critical capacity of your intellect. The truth is not embodied in any political faction. If I expected to think with integrity, I had to go my own way. Realizing this was a hinge in my life, I never looked back.

The Friend/Enemy Model

To be sure, putting your brain on the shelf for political advantage has a long philosophical tradition behind it. There are of course the Marxists, who tag people as exploiters or the oppressed based on class identity – and their modern successors who apply these designations, to the point of absurdity, to a huge range of characteristics of race, sex, religion, physical ability, and gender identity. To them, life can be nothing but conflict.

But it’s not just a left-wing problem. Have a look at the work of Carl Schmitt – a right-wing Hegelian/Nietzschean – and his 1932 essay “The Concept of the Political.” (If you already know something about the situation in German academia in 1932, you can guess the rest.)

To Schmitt, to be political is the highest calling of the human person, and this always means separating people according to friends or enemies. He despises classical liberalism and economics precisely for the reason that they attempt to obliterate the friend/enemy distinction, replacing it with trade, cooperation, and forms of competition in which every competitor wins.

On what basis does politics make the friend/enemy distinction? Schmitt says it has nothing to do with norms or even high theory. “In its entirety,” he writes, “the state as an organized political entity decides for itself the friend-enemy distinction.”

But what does it mean to be an enemy? It refers to “the real possibility of physical killing.” Without bloodshed, it means nothing, which is why “war is the existential negation of the enemy. It is the most extreme consequence of enmity.”

So let’s review. To be political is the essence of life, according to Schmitt. The core of the political means to be willing to kill enemies. Therefore, we might conclude from his writings, death itself is the essence of life. Thus did Carl Schmitt become the leading philosopher of National Socialism and the intellectual font of what became the Holocaust.

Elections and Warfare Sociology

It’s true that the friend/enemy model makes sense to many people during the election season. We are all empowered with the vote. We feel a great sense of responsibility for how we use it, despite overwhelming evidence that your one vote will not swing an election. It’s mostly symbolic, but it matters, because people like participating in the democratic process, gaining power for friends and obliterating the enemy.

But the election is over. Why does this attitude persist even though no one in politics and government will be asking for our presidential vote for another four years? It’s a kind of addiction, a mental habit that gives us considerable pleasure. Maybe it’s primal, an instinctual form of low-grade violence that Freud suggests we need to overcome to have civilization.

In practice, what does blindly cheering for one team over another in politics achieve? Nothing good, in my view. It becomes psychologically debilitating to expend so much time and energy on it. Indeed, politics pursued in this fashion is poison to the human spirit. It relies on sustaining a level of hate that is toxic for anyone who wants to live a full life.

The Problem of Trumpism

The problem is compounded by the lack of intellectual coherence at the top of the ruling party. It’s not exactly a new problem, but it is unusually poignant in the case of Donald Trump. We haven’t seen this level of nationalist rhetoric in my lifetime, and it pertains to the core functioning of American economic life. The lack of appreciation for the intellectual and political achievements of free trade is palpable. Adding to that, he seems to be pushing for expensive infrastructure spending, more military pork, and an immigration policy that would certainly require extensive surveillance of American businesses.

At the same time, he has said some wonderful things about deregulation, tax cuts, bureaucracy downsizing, education, and health care, proposals dear to any liberty lover’s heart.

At best, then, the agenda is confused. So people are weighing the relative benefits and costs. Will the benefits of tax cuts be so great as to make up for the downside of new tariffs? How bad will the immigration controls be compared with the supposed benefits to national security? And so on.

This is not just an intellectual exercise. The end game here is to answer the critical question: should we favor this team or oppose it?

Think for Yourself

I suggest that this is the wrong way to think about the matter. We should not obsess over the question of whether we should cheer Trump or condemn him, become his fans or swing into opposition, defend him against enemies or become his enemies.

There is another approach. It is not easy in a hugely partisan political environment, but it is the right one. Stay independent, think clearly, watch carefully, adhere to principle, speak fearlessly, praise when good things happen and oppose when bad things happen, tell the truth as you see it, and otherwise be ever vigilant in defense of rights and liberties, yours and everyone’s. To be steadfast and honest in these times is the height of political virtue.

“At all times sincere friends of freedom have been rare,” says Lord Acton, “and its triumphs have been due to minorities.”

So, yes, by maintaining your objectivity and principles in these times, you will be in the minority. But you will be a friend of freedom, and you could make all the difference.

Jeffrey Tucker

Jeffrey Tucker is Director of Content for the Foundation for Economic Education. He is also Chief Liberty Officer and founder of Liberty.me, Distinguished Honorary Member of Mises Brazil, research fellow at the Acton Institute, policy adviser of the Heartland Institute, founder of the CryptoCurrency Conference, member of the editorial board of the Molinari Review, an advisor to the blockchain application builder Factom, and author of five books. He has written 150 introductions to books and many thousands of articles appearing in the scholarly and popular press.

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution 4.0 International License, which requires that credit be given to the author. Read the original article.

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What Are the Chances That a Muslim Is a Terrorist? – Article by Sanford Ikeda

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The New Renaissance HatSanford Ikeda
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It’s flu season and for the past two days you’ve had a headache and sore throat. You learn that 90% of people who actually have the flu also have those symptoms, which makes you worry.  Does that mean the chances of your having the flu is 90%?  In other words, if there’s a 90% chance of having a headache and sore throat given that you have the flu, does that mean there’s a 90% chance having the flu given that you have a headache and sore throat?We can use symbols to express this question as follows: Pr(Flu | Symptoms) = Pr(Symptoms | Flu) = 90%?

The answer is no. Why?

If you think about it you’ll realize that there are other things besides the flu that can give you a combination of a headache and sore throat, such as a cold or an allergy, so that having those symptoms is certainly not the same thing as having the flu.  Similarly, while fire produces smoke, the old saying that “where there’s smoke there’s fire” is wrong because it’s quite possible to produce smoke without fire.

Fortunately, there’s a nice way to account for this.

How Bayes’ Theorem Works

Suppose you learn that, in addition to Pr(Symptoms | Flu) = 90%, that the probability of a randomly chosen person having a headache and sore throat this season, regardless of the cause, is 10% – i.e. Pr(Symptoms) = 10% – and that only one person in 100 will get the flu this season – i.e. Pr(Flu) = 1%.  How does this information help?

Again, what we want to know are the chances of having the flu, given these symptoms Pr(Flu | Symptom).  To find that we’ll need to know first the probability of having those symptoms if we have the flu (90%) times the probability of having the flu (1%).  In other words, there’s a 90% chance of having those symptoms if in fact we do have the flu, and the chances of having the flu is only 1%. That means Pr(Symptoms | Flu) x Pr(Flu) = 0.90 x 0.01 = 0.009 or 0.9% or a bit less than one chance in 100.

Finally, we need to divide that result by the probability of having a headache and sore throat regardless of the cause Pr(Symptoms), which is 10% or 0.10, because we need to know if your headache and sore throat are flu Symptoms out of all headache-and-sore symptoms that have occurred.

So, putting it all together, the answer to the question, “What is the probability that your Symptoms are caused by the Flu?” is as follows:

Pr(Flu | Symptoms) = [Pr(Symptoms | Flu) x Pr(Flu)] ÷ Pr(Symptoms) = 0.90 x 0.01 ÷ 0.10 = 0.09 or 9%.

So if you have a headache and sore throat there’s only a 9% chance, not 90%, that you have the flu, which I’m sure will come as a relief!

This particular approach to calculating “conditional probabilities” is called Bayes’ Theorem, after Thomas Bayes, the 18th century Presbyterian minister who came up with it. The example above is one that I got out this wonderful little book.

Muslims and Terrorism

Now, according to some sources (here and here), 10% of Terrorists are Muslim. Does this mean that there’s a 10% chance that a Muslim person you meet at random is a terrorist?  Again, the answer is emphatically no.

To see why, let’s apply Bayes’ theorem to the question, “What is the probability that a Muslim person is a Terrorist?” Or, stated more formally, “What is the probability that a person is a Terrorist, given that she is a Muslim?” or Pr(Terrorist | Muslim)?

Let’s calculate this the same way we did for the flu using some sources that I Googled and that appeared to be reliable.  I haven’t done a thorough search, however, so I won’t claim my result here to be anything but a ballpark figure.

So I want to find Pr(Terrorist | Muslim), which according to Bayes’ Theorem is equal to…

1) Pr(Muslim | Terrorist):  The probability that a person is a Muslim given that she’s a Terrorist is about 10% according to the sources I cited above, which report that around 90% of Terrorists are Non-Muslims.

Multiplied by…

2) Pr(Terrorist):  The probability that someone in the United States is a Terrorist of any kind, which I calculated first by taking the total number of known terrorist incidents in the U.S. back through 2000 which I tallied as 121 from this source  and as 49 from this source. At the risk of over-stating the incidence of terrorism, I took the higher figure and rounded it to 120.  Next, I multiplied this times 10 under the assumption that on average 10 persons lent material support for each terrorist act (which may be high), and then multiplied that result by 5 under the assumption that only one-in-five planned attacks are actually carried out (which may be low).  (I just made up these multipliers because the data are hard to find and these numbers seem to be at the higher and lower ends of what is likely the case and I’m trying to make the connection as strong as I can; but I’m certainly willing to entertain evidence showing different numbers.)  This equals 6,000 Terrorists in America between 2000 and 2016, which assumes that no person participated in more than one terrorist attempt (not likely) and that all these persons were active terrorists in the U.S. during those 17 years (not likely), all of which means 6,000 is probably an over-estimate of the number of Terrorists.

If we then divide 6,000 by 300 million people in the U.S. during this period (again, I’ll over-state the probability by not counting tourists and visitors) that gives us a Pr(Terrorist) = 0.00002 or 0.002% or 2 chances out of a hundred-thousand.

Now, divide this by…

3) The probability that someone in the U.S. is a Muslim, which is about 1%.

Putting it all together gives the following:

Pr(Terrorist | Muslim) = [Pr(Muslim | Terrorist) x Pr(Terrorist)] ÷ Pr(Muslim) = 10% x 0.002% ÷ 1% = 0.0002 or 0.02%.

One interpretation of this result is that the probability that a Muslim person, whom you encounter at random in the U.S., is a terrorist is about 1/50th of one-percent. In other words, around one in 5,000 Muslim persons you meet at random is a terrorist.  And keep in mind that the values I chose to make this calculation deliberately over-state, probably by a lot, that probability, so that the probability that a Muslim person is a Terrorist is likely much lower than 0.02%.

Moreover, the probability that a Muslim person is a Terrorist (0.002%) is 500 times lower than the probability that a Terrorist is a Muslim (10%).

(William Easterly of New York University applies Bayes’ theorem to the same question, using estimates that don’t over-state as much as mine do, and calculates the difference not at 500 times but 13,000 times lower!)

Other Considerations

As low as the probability of a Muslim person being a Terrorist is, the same data do indicate that a Non-Muslim person is much less likely to be a Terrorist.  By substituting values where appropriate – Pr(Non-Muslim | Terrorist) = 90% and Pr(Non-Muslim) = 99% – Bayes’ theorem gives us the following:

Pr(Terrorist | Non-Muslim) = [Pr(Non-Muslim | Terrorist) x Pr(Terrorist) ÷ Pr(Non-Muslim) = 90% x 0.002% ÷ 99% = 0.00002 or 0.002%.

So one interpretation of this is that a randomly chosen Non-Muslim person is around one-tenth as likely to be a Terrorist than a Muslim person (i.e. 0.2%/0.002%).  Naturally, the probabilities will be higher or lower if you’re at a terrorist convention or at an anti-terrorist peace rally; or if you have additional data that further differentiates among various groups – such as Wahhabi Sunni Muslims versus Salafist Muslim or Tamil Buddhists versus Tibetan Buddhists – the results again will be more accurate.

But whether you’re trying to educate yourself about the flu or terrorism, common sense suggests using relevant information as best you can. Bayes’ theorem is a good way to do that.

(I wish to thank Roger Koppl for helping me with an earlier version of this essay. Any remaining errors, however, are mine, alone.)

Sanford (Sandy) Ikeda is a professor of economics at Purchase College, SUNY, and the author of The Dynamics of the Mixed Economy: Toward a Theory of Interventionism. He is a member of the FEE Faculty Network.

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution 4.0 International License, which requires that credit be given to the author. Read the original article.

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In Defense of My Participation Trophy – Article by Tricia Beck-Peter

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The New Renaissance HatTricia Beck-Peter
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I have one participation trophy, from a youth soccer league I joined when I was five. I joined the league, not because I aspired to a career of professional athleticism, but because my mother wanted me to try a sport.

I was awful at soccer. The coach called me “flower child,” because I would grab my teammates by the hand when we ran drills. The coach imagined my motives to be peace and love and friendship, when in reality I was just trying to pull the slower kids forward. My motives were not derived from the hippie upbringing he imagined had shaped me, but out of compassion for those even less athletically inclined than myself.

Too Much Reward?

My participation trophy is the target of ridicule by smug baby-boomers who spout an “up by the bootstraps” ideology. For them, it is a symbol of mollification and complacency. They think it makes me too soft to handle the pressure of this world. This five-inch-tall piece of cheap, gold-painted plastic threatens their entire worldview.

Do they think that children don’t understand participation trophies? Do they think they don’t notice that the better players get bigger, shinier pieces of cheap gold plastic? They do. Even at five I knew my trophy did not mean I was destined to be a famous soccer player.

The trophy meant that I tried. The trophy meant that every Saturday morning, despite the skinned knee earned in that week’s practice that was still healing, I showed up to play. It meant that despite the heat and the way the grass made me itch and the fact that I had never scored a single goal, I kept going to practice. It meant I kept trying to help the slow kids run faster. It meant I kept trying.

Is it so evil to encourage a child to try by offering them a reward? Those who decry participation trophies will say that trying matters less than succeeding, but I disagree. Trying is a requirement for succeeding. To have a fulfilled life, you must try many more things than you succeed in. To accomplish anything, you must try. That trophy is not a pat on the back and a grudging “good enough.” It is a reminder of the time you spent trying.

Trying Is Good

It’s easy to pick on millennials. We enjoy a higher quality of life than any previous generation. The draft is over, there’s a vaccine for polio, and we can watch color TV on the tiny computers that live in our pockets and let us make phone calls. To the outside observer, we are soft, entitled, and complacent.

Yet Forbes calls us “the true entrepreneur generation.” Our smartphones are loaded with more than Netflix and Buzzfeed, they’re loaded with investment apps like Acorns and business software like Square. One study showed that 63% of 20-somethings want to start a business. While they may not be currently starting their businesses, 90% of millennials recognize entrepreneurship as a mentality, meaning they’re entrepreneurial about their work in settings outside the old “entrepreneurs start businesses” model of generations prior.

Maybe this mindset is not in spite of participation trophies, but in part inspired by them. Entrepreneurs fail. They fail all the time, and they keep trying. They keep trying the same way they did when they were children in grass-stained soccer jerseys, in leagues where they earned participation trophies.


Tricia Beck-Peter is a development intern at FEE, and a graduate of Flagler College.

This article was originally published on FEE.org. Read the original article.

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A Plan to Make Me Great Again – Article by Jeffrey Tucker

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Categories: Economics, Politics, Tags: , , , , , , , , , ,

The New Renaissance HatJeffrey Tucker
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I was out shopping for a sweater this weekend and I ran into Donald Trump, who told me that I should stop outsourcing my job.

“You should be knitting your own sweaters.”

I explained that I’m not very good at knitting. I have other things to do, in any case. This whole idea strikes me as a huge waste of time. I just can’t see myself sitting at home doing knitting. It’s true that this would give me a job, but it is not a job I want, especially since someone else wants to do it for me.

But he strongly disagreed, explaining that the problem with this country is that we keep taking away our own jobs and keep giving them to other people, who then get the money. This is a bad thing. This is why we are all suffering so much.

I persisted with objections, so he proposed a deal. If I continue to outsource my job, I will have to pay him a 35% tax, which means that if I spend $50 on a sweater, I will need to send him $17.50. That’s a bummer, we both agreed.

Instead, he said, if I take up sweater knitting, he will reduce my income tax rate to a flat 15%, plus exempt my sweater-making from all existing regulations. I would be free to make any sweater I want. The catch is that I have to knit sweaters, because doing that will make me great.

“Just think of it,” he said, “Jeffrey Tucker is open for business!”

In some ways, this sounds pretty sweet. A bit goofy but OK. It’s awkward but I’ll take up knitting on nights and weekends, producing at least one sweater per month. I will continue to do this in order to earn the promised benefit.

Also, I’ll stop buying sweaters at the store and thus end my addiction to outsourcing my production. It’s true that I have given up a huge amount of my freedom over how I spend my time and use my resources (I have to buy all those yarns and needles), but, on the plus side, I avoid a punishing penalty, pay lower taxes, and obey fewer regulations.

The deal doesn’t strike me as very efficient, but, as Trump said, this focus on efficiency over greatness is precisely what has gone wrong in this country.

Sometimes I wonder why his version of greatness should prevail over mine, but, hey, he is the President.

One Month Later

I finally finished my first sweater, and I’m a bit behind on other things. I gave up my job driving Uber. I stopped selling stuff on eBay. I was doing volunteer work for a local charity and I had to give that up too. But at least now I have a sweater. Maybe I can make money at this after all.

I tried to sell it but I couldn’t find any buyers. It turns out that everyone else who needed sweaters had made a similar deal. They too had been persuaded to become great by knitting their own sweaters. We had all become sweater-self-sufficient.

I hope they aren’t feeling as poor as I feel now.

I gradually came to realize something. If you cooperate with others, share the work, find out what you do best, trade with others, and make your own decisions about what you want to insource versus outsource, you can eventually find the best strategy for using your time and resources well.

As Adam Smith proved so long ago, a key to prosperity is the expansion of the division of labor, that is, finding ways to benefit from the talents of others wherever they happen to be. I can only do this if I am truly free to buy and sell based on my own evaluation of what benefits me the most. And under this system, what benefits me also happens to benefit everyone.

This system, which we can call free trade, has the added benefit of creating a kind of community feeling. Peace. Prosperity. There is something great about that after all.

Jeffrey Tucker


Jeffrey Tucker

Jeffrey Tucker is Director of Content for the Foundation for Economic Education and CLO of the startup Liberty.me. Author of five books, and many thousands of articles, he speaks at FEE summer seminars and other events. His latest book is Bit by Bit: How P2P Is Freeing the World.  Follow on Twitter and Like on Facebook. Email.

This article was originally published on FEE.org. Read the original article.

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Culture and the Snare of Group Identity – Article by John Glenn

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Categories: Culture, Politics, Tags: , , , , , , , , , ,

The New Renaissance HatJohn Glenn

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D. Vance’s Hillbilly Elegy joins the ranks of several works that explore many of the challenges facing today’s white working class. The book shines a light on Vance’s Scots-Irish hillbilly heritage in Greater Appalachia, one of the most forlorn economic regions in the country.

Vance not only offers readers a timely, first-person perspective on Rust Belt America, but he also brings the cultural politics of an important segment of white America to the forefront. For many minorities, white culture itself has been historically presented as the standard bearer of privilege, but Vance tells a fuller story. One part of that story is that white mainstream culture shouldn’t be conflated with the trailer parks of southeastern Ohio.

It wasn’t long before I realized that some of the traditions and vices Vance grew up with would seem very familiar to other minorities, whether on the southside of Chicago, the Pine Ridge Reservation in Nebraska, or South Boston. But his story doesn’t succeed because it exposes the detrimental norms foisted on many who live in ethnic enclaves. Instead, it takes aim at something more injurious: the tremendous burden of upholding group identity.

The Narcotic Pleasure of Being the Underdog

In his article “Revolt of the Masses,” David Brooks highlighted Vance’s honest and blunt portrayal of hillbilly life. Brooks describes it as a loyalty culture: “Families might be messed up in a million ways, but any act of disloyalty – like sharing personal secrets with outsiders – is felt acutely.”

This is a twisted situation where, by virtue of constructs like class, race, or colloquial street name, fidelity to the group is demanded and freedom of thought curtailed. John McWhorter has remarked that there is a “narcotic pleasure” in the underdog-ism and victimology that plagues groups who see individual effort to pull oneself out of dismal circumstances as betrayal. In this context, social stagnation and failure become legitimate options. McWhorther’s views are similar to Vance’s own convictions that hillbilly culture might be its own worst enemy when it comes to socioeconomic progress.

Over 20 years ago, Thomas Sowell articulated the costs of being beholden to group identity. “Among its more serious social consequences are (1) putting a dangerous leverage in the hands of extremist fringes within each group, and (2) stifling the cultural advancement of lagging groups by sealing them off from the cultural advantages of the larger society around them,” Sowell said.

This is why cultural advancement should be a mainstay in conversations about Americans who have been sidelined economically and nearly hollowed out socially.

But advancement needn’t be about moralizing or federal intervention. In fact, its best incarnation is practical guidance. It’s about helping people recognize existing opportunities, about speaking to the greater capacities people have beyond alcoholism, criminality, family disintegration, and other self-destructive tendencies. On the one hand, some people sense that mobility is possible even within the lowest social strata. On the other hand, in a group context, convenient excuses are abundant (the system, the elites, outsiders, disadvantage) and need to be unveiled for what they are.

The point is that until the stranglehold of group identity can be broken, a paradigm shift, enabling people to get beyond the very real and perceived obstacles, can’t happen.

Even as Vance expresses his love for the Appalachian experience that shaped and molded him – for the family, friends, and homesteads that make up his fondest memories – he doesn’t paper over the domestic chaos. Instead, Vance acknowledges the intense sense of parochialism that’s rife in Appalachia. And he takes a bold step in placing the burden of resolving a myriad of problems on the shoulders of “the broad community of hillbillies.”

This is laudable because it means that Vance isn’t acting in the service of group protectionism. But, why not? Why not completely slime public policy and corporate greed? Why not cite job loss as the culprit? The truth is there’s something more important at stake than the misplaced pride that leaves people self-conscious about being culturally authentic and loyal.

Curtail Liberty to Help the Worse-Off?

Even though authenticity is an age-old sham, there are status points and street cred to be earned by adhering to the neglected group script. Mostly the concept of authenticity rests on the specious notion that some groups experience America as a monolith, without variation. Oddly, there is also the tacit acknowledgment that certain groups, over time, have simply come to demonstrate particular mores – many of which are embraced and celebrated in-group.

This contradiction is what leads so-called underdog groups to brazenly demand acceptance and intervention at the same time.

For example, Linda Tirado, who is well-known for “explaining” to America what it means to be poor and make questionable decisions, offered this opinion: “Poverty is bleak and cuts off your long-term brain. It’s why you see people with four different babydaddies instead of one. You grab a bit of connection wherever you can to survive.” In the article, Tirado cataloged several unhelpful habits and then ended by saying that sympathy wasn’t the goal and that she merely wanted to explain.

But the message that everything from healthcare to decent food to condoms is inaccessible to people because they are not rich prioritizes a false group narrative (in this case about working-class people) over individual experience. The implication is that society should act collectively to meet the needs of this segment of the population rather than hold intact a free society for all. This is the fallacious thinking that cuts across far too many demographics.

Americans everywhere should reject burdensome group identities. Some identities are unfortunately shaped by demanding more accountability from those outside the group than those within it. Others may be even worse because they are overly nationalist and represent what Benedict Anderson called imagined communities.

Let’s hope that one day when the specter of group restraint dissipates and the individual is front and center, Americans will gain not only more liberty, but also clarity about the challenges we face as a nation.

John Glenn is an Assistant Professor of English at Atlanta Metropolitan State College, and his writings have appeared in The Federalist, The Birmingham News, The Atlanta Journal-Constitution, Library Journal, and elsewhere.

This article was originally published on FEE.org. Read the original article.

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The Only Good Politics Are Boring Politics – Article by J. Andrew Zalucky

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Categories: Culture, Politics, Tags: , , , , , , , , , , , ,

The New Renaissance HatJ. Andrew Zalucky
******************************

If 2016 has taught us anything, it’s that boring politics are the best politics. A staid political culture is a sign of a healthy society, as it allows humanity’s passions to flourish outside of the coercive and violent realm of political power. Those who say we should look to our leaders to inspire us, or that politics should be the engine of “progress,” are unwittingly calling for the destruction of civil society.

The Joy of Boredom

Since the end of the Cold War, for example, the political climate of northern and western Europe has been characterized by the yawn-inducing push and pull between liberal democracy and social democracy (with a side of Christian conservatism here, a dash of old-school leftism there). Both sides share a broad commitment to stability and market economics, but may have marginal scuffles over the size of the welfare state and the extent of government regulation. Political factions are more likely to fight about numbers and the wording of a law than engage in grand, sweeping oratory over revolutionary manifestos. Prior to the migrant crisis, this order was rarely disturbed – even by the troubles within the Eurozone.

While this doesn’t get the blood rushing in the way that romantic mass-movements did in the past, it’s also a good backstop against the bloodletting that those movements produced. People here exercise their passions through sports, music, and entertainment. Nods to historical glories and national myths are safely cordoned off in powerless, symbolic royal families, rather than ecstatic throngs yearning for a “dear leader.” While political life in this “end of history” scenario doesn’t make for epic storytelling, it helps to produce the world’s happiest societies.

For the most part, this reality exists in the “Anglosphere” as well, as Canada, New Zealand, and Australia all enjoy a situation similar to that of the Eurasian peninsula. And yes, even Great Britain and the United States broadly share this state of affairs. We can tell when this order has been disrupted in the wrong way. I remember hearing pundits and journalists decry the 2012 election as “bitter” and “divisive.” Well, here we are in 2016. We’ve seen America’s own centre-right party swallowed whole by a candidate’s cynical campaign of nationalism and a narcissistic cult of personality. Meanwhile, factions of our centre-left party have shown an affinity for unilateral executive power and ideologies that should have crumbled with the Berlin Wall. The most awful political campaign of our lifetimes makes 2012 look like the pinnacle of sane, democratic discourse.

Inspired into Misery

By contrast, look at the countries with the most passionate, ideologically-charged and “inspirational” political cultures. Chavismo-style socialism has led Venezuela into a grave economic crisis and turned one of the most resource-rich countries on Earth into a humanitarian disaster. There’s no need to exaggerate the effect of the Kim-dynasty cult in North Korea, with its toxic mix of Marxist-Leninism and the legacy of the Japanese Emperors: famine, malnutrition, and the stultification of the mind that comes with any closed society. Theocratic societies may do a great job at fulfilling humanity’s need for spirituality and transcendence, but are abysmal in terms of civil liberties, women’s rights, and any sense of pluralism.

To the extent that life has improved in places like China, it is due to the regime moving away from its motivating ideology, not a misplaced loyalty to it. Ideas like property rights, limited government, and sovereignty of the individual may seem mundane to those in the West who’ve been conditioned to take them for granted, but once people abandon these ideas for the sweeping romantic ecstasy of leader-worship, national supremacy, or prostration before a man-made god, they become more willing to see their fellow citizens as numbers or a means to a political end. It’s this ecstatic frenzy that makes people comfortable with deportations, torture, show trials, and mass murder.

Libertarians and classical liberals would do well to read the advice Alan Wolfe gives in The Future of Liberalism. Though Wolfe is a liberal more in the New Deal/Great Society sense of the word, he still provides valuable insight for maintaining a stable political culture:

On matters of the heart, romanticism touches on the deepest emotions, expands the human imagination, and produces world-class music and art. But however much romanticism can serve as a corrective to liberalism, it ought never to be a substitute for it. “Politics,” Max Weber wrote, “is a strong and slow boring of hard boards.” That does not sound very dramatic, but its undramatic quality is what makes politics a blessing in disguise. When liberal politics works – either at home or abroad – fewer people are killed in the name of a cause, and fewer lives are disrupted to serve as characters in someone else’s drama.

He’s right to note that romanticism can be a corrective, as ideas are still important, but he wisely splits the difference in showing that proceduralism must still prevail over lofty notions of “getting things done.” He goes on to say that liberals

… ought to be aware of the powerful attractions of militarism, nationalism, and ideology, and they ought to be strong enough to resist them. Let the passions reign in the museums and concert halls. In the halls of government, reason, however cold, is better than emotions, however heartfelt.

In much the same vein, Robert O. Paxton wrote in The Anatomy of Fascism that

Fascism rested not on the truth of its doctrine but upon the leader’s mystical union with the historic destiny of his people, a notion related to romanticist ideas of national historic flowering and of individual artistic or spiritual genius, though fascism otherwise denied romanticism’s exaltation of unfettered person creativity. The fascist leader wanted to bring his people into a higher realm of politics that they would experience sensually: the warmth of belonging to a race now fully aware of its identity, historic destiny, and power; the excitement of participating in a vast collective enterprise; the gratification of submerging oneself in a wave of shared feelings, and of sacrificing one’s petty concerns for the group’s good; and the thrill of domination.

We’re right to be worried at the impulses at work in this election cycle. As Adam Gopnik wrote in the New Yorker earlier this year, “The national psyche never gets over learning that its institutions are that fragile and their ability to resist a dictator that weak.” When examining the two major party candidates, the American electorate is indeed left with a terrible choice. Still, we can survive, resist, and undermine the inevitably bad outcome.

J. Andrew Zalucky

J. Andrew Zalucky is a Connecticut-based writer focused on politics, history and cultural issues. Since 2011, he has run his own website, For the Sake of Argument. In addition, he writes about extreme music and is a regular contributor to Decibel and Metal Injection.

This article was originally published on FEE.org. Read the original article.

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Horror: Pirate Contacts Lenses! – Article by Andrew Quinlan

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Categories: Economics, Politics, Science, Tags: , , , , , , , , , , , , ,

The New Renaissance Hat
Andrew Quinlan
******************************

This Halloween, scores of consumers have purchased nearly 100,000 pairs of “counterfeit, illegal, and unapproved” colored contacts for costumes, all of which have been seized by “Double Vision,” an FDA-led consumer safety campaign.

Not surprisingly, optometrists and their favored lens manufacturers like Johnson & Johnson are using this news hook as a means of inciting fear. They are now stepping on the gas of their congressional lobbying efforts so that their bill, The Contact Lens Consumer Health Protection Act (CLCHPA), is passed into law.

The CLCHPA’s objective is to rid the country of the free market reforms brought about by The Fairness in Contact Lens Consumer Act (FCLCA), a 2003 bill that opened the contacts lens industry to free market competition for the first time.

Before the passage of this bill, eye patients had virtually no rights, while optometrists had almost total control over the sale of contact lenses. Doctors were not obligated to give patients copies of their prescriptions. As a result, they could mandate specifically where patients were allowed to purchase lenses. This usually meant that consumers had no choice but to purchase Johnson & Johnson’s Acuvue lenses—eye doctors’ favored brand—directly from optometrists at inflated retail costs.

The Republican-controlled Congress’ 2003 FCLCA legislation stopped this government-created monopoly by enforcing consumer rights. It forced doctors to give patients copies of their prescriptions and gave them only an 8-hour window to file complaints regarding third-party sale requests, halting the process of “pocket vetoing” valid sales.

As a result, consumers were left with far more buying options. With barriers to entry significantly curtailed, third-party lens sellers like Walmart, Costco, and 1-800 Contacts had a much easier time selling contacts. This, in turn, led prices for contact lenses to spiral downward, allowing over 41 million Americans to purchase more than $7 billion worth of contact lenses every year.

Eye Safety?

Enraged, optometrist associations and contact lens vendors like Johnson & Johnson immediately began lobbying Congress to change the law. For the past decade, they have been claiming that these third-party vendors are jeopardizing the eye safety of millions of Americans. Specifically, they have expressed concern that these lenses pose a risk of developing keratitis, an eye infection affecting the cornea.

For these reasons, members of the medical lobby drafted the CLCHPA, a new bill that will greatly increase regulations in the contact lens industry, making it extremely difficult for third-party lens vendors to stay in business.

The bill is a solution in search of a problem. It will re-capture the contact lens industry and propel prices upwards, all while failing to increase safety even the slightest degree.

It is ridiculous that some doctors are correlating buying contact lenses from reputable third-party companies like Costco, Walmart, and 1-800 Contacts with purchasing them illegally from a Halloween street vendor.

For one, the lenses sold by third-party sellers are federally regulated. You still need a prescription to purchase contact lenses from online sellers (although numerous studies, as well as practices in other nations, have shown that even prescriptions are not necessary), and doctors still have the ability to strike down each sale if there is a legitimate health concern.  

In a letter written to the CLCHPA’s authors, Dr. Paul B. Donzis, a professor of ophthalmology at UCLA, made clear that buying contacts from online sellers poses no danger.  “Based on…authoritative scientific articles, it appears that online sales of contact lenses have not contributed to any increase in the incidence of contact lens related injury,” he said.

Moreover, the medical studies match the doctor’s rhetoric. A 20-year epidemiologic study conducted by Doctors  Schein, Stapleton, and Keay, published in 2007 by the medical journal Eye & Contact Lens, found that there has not been any increase in microbial keratitis since the online contact industry sprouted up and began providing more and better affordable choices for consumers.

The empirical data is as clear as day: no one is at risk from purchasing lenses from third-party contact lens vendors. The only risk that third-party vendors pose is to the market share of the crony medical lobby.

This Halloween, Congress should not be duped by the false claims coming from the mouths of the medical lobby. Congress is tricked often enough. This time, they should give American families a treat by reading through these prominent medical studies and striking down the anti-consumer Contact Lens Consumer Health Protection Act (CLCHPA) once and for all.

quinlan

Andrew Quinlan

Andrew F. Quinlan is co-founder and president of the Center for Freedom and Prosperity (@CFandP).

This article was originally published on FEE.org. Read the original article.

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Hurricane Matthew Has No Silver Lining – Article by Dan Sanchez

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Categories: Economics, Politics, Tags: , , , , , ,

The New Renaissance Hat
Dan Sanchez
******************************

Hurricane Matthew is barreling down on the southeast Atlantic coast. Sadly, the region is not only plagued by disastrous weather, but economic fallacies that compound the disaster. Like clockwork, outrage and policies against “price gouging” were the first to emerge.

For some intellectuals, common sense is for mere commoners.And now, just as predictably, the Broken Window Fallacy is emerging on the horizon. Discussion about the storm is playing out just like the famous parable of the broken window, created by Frederic Bastiat, and updated for modern audiences by Henry Hazlitt. In Hazlitt’s version of the parable, a youth throws a brick through the window of a bakery. Neighbors gather around to commiserate with the baker over his misfortune.

Similarly, decent people all over the country are sending their hearts out to the unfortunate people whose homes and businesses are in Hurricane Matthew’s path. The category 4 hurricane is sure to break a great many windows. In fact, in one video I saw, debris shattered a house’s window right behind an intrepid weather reporter as he was talking to the camera.

Of course, the damage will go far beyond broken windows. Entire houses and businesses will be flooded. Lives will be financially ruined. Some lives have already been lost entirely. It is only common sense to recognize such vast destruction as pure loss and misfortune.

But for some intellectuals, common sense is for mere commoners. They delight in using more sophisticated reasoning to arrive at contrarian conclusions, which they generously share with their ignorant, benighted brethren.

Taking Away Resources

In the parable, the clever ones among the crowd console the baker by pointing out the social good that will come from his private misfortune. As Hazlitt puts the argument:

How much does a new plate glass window cost? Three hundred dollars? That will be quite a sum. After all, if windows were never broken, what would happen to the glass business? Then, of course, the thing is endless. The glazier will have $300 more to spend with other merchants, and these in turn will have $300 more to spend with still other merchants, and so ad infinitum. The smashed window will go on providing money and employment in ever-widening circles. The logical conclusion from all this would be, if the crowd drew it, that the little hoodlum who threw the brick, far from being a public menace, was a public benefactor.

And now, this very morning, we have a USA Today writer playing this exact same role in the discussion of Hurricane Matthew. Paul Davidson consoles the storm’s victims as follows:

But hurricanes typically don’t harm a nation’s economic growth. And much of the losses in the region are later offset. Most damaged homes, businesses and infrastructure are repaired or rebuilt, generating economic activity. And at least some of the disruptions to retail and other businesses are made up in the following weeks and months as consumers release pent-up demand. (Emphasis added.)

The problem with Davidson’s analysis is the same problem that beset the 19th century writers whom Bastiat was lampooning when he wrote the broken window parable. Their clever contrarianism is more sophistical than sophisticated. As Bastiat put it, they only look at “the seen” and entirely neglect “the unseen.” The “unseen” is the opportunity cost of repairing damage. As is so often the case, sound economics vindicates common sense by giving the unseen its due regard. As Hazlitt wrote:

Now let us take another look. The crowd is at least right in its first conclusion. This little act of vandalism will in the first instance mean more business for some glazier. The glazier will be no more unhappy to learn of the incident than an undertaker is to learn of a death. But the shopkeeper will be out $300 that he was planning to spend for a new suit. Because he has had to replace a window, he will have to go without the suit (or some equivalent need or luxury). Instead of having a window and $300 he now has merely a window. Or, as he was planning to buy the suit that very afternoon, instead of having both a window and a suit he must be content with the window and no suit. If we think of him as part of the community, the community has lost a new suit that might otherwise have come into being, and is just that much poorer.

The glazier’s gain of business, in short, is merely the tailor’s loss of business. No new “employment” has been added. The people in the crowd were thinking only of two parties to the transaction, the baker and the glazier. They had forgotten the potential third party involved, the tailor. They forgot him precisely because he will not now enter the scene. They will see the new window in the next day or two. They will never see the extra suit, precisely because it will never be made. The see only what is immediately visible to the eye.

Indeed, we can consider even more “unseen” victims of the vandal. A new suit can be considered a consumption good. But what if the baker would have otherwise spent the $300 on a producer’s good? What if he would have used it to buy a new, more efficient oven? The need to repair the window would have prevented that investment: an investment that could have increased the amount of baked goods available to the community. All those consumers who would have benefited from that greater abundance would then have also suffered a loss.

Similarly, USA Today’s Davidson sees the “economic activity” generated by the repairing and rebuilding of homes, businesses, and infrastructure that will be damaged or destroyed by Hurricane Matthew. But he neglects the economic activity that would have created entirely new goods and services: activity now made impossible because the resources needed are tied up restoring old goods and services.

Hazlitt also deals handily with the counterargument that the replacements will be more modern and better than what was destroyed:

It is sometimes said that the Germans or the Japanese had a postwar advantage over the Americans because their old plants, having been destroyed completely by bombs during the war, could be replaced with the most modern plants and equipment and thus produce more efficiently and at lower costs than the Americans with their older and half-obsolete plants and equipment. But if this were really a clear net advantage, Americans could easily offset it by immediately wrecking their old plants, junking all the old equipment. In fact, all manufacturers in all countries could scrap all their old plants and equipment every year and erect new plants and install new equipment.

The simple truth is that there is an optimum rate of replacement, a best time for replacement. It would be an advantage for a manufacturer to have his factory and equipment destroyed by bombs only if the time had arrived when, through deterioration and obsolescence, his plant and equipment had already acquired a null or a negative value and the bombs fell just when he should have called in a wrecking crew or ordered new equipment anyway.

We do the victims of Hurricane Matthew no service by offering them false consolation. Sound economics, common sense, and common decency all arrive at the same conclusion: that natural disasters truly are disasters to those afflicted. And the victims deserve our unstinting sympathy and support.

dan-sanchez


Dan Sanchez

Dan Sanchez is Managing Editor of FEE.org. His writings are collected at DanSanchez.me.

This article was originally published on FEE.org. Read the original article.

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