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Contra Robert Shiller on Cryptocurrencies – Article by Adam Alonzi

Contra Robert Shiller on Cryptocurrencies – Article by Adam Alonzi

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Adam Alonzi

While warnings of caution can be condoned without much guilt, my concern is critiques like Dr. Shiller’s (which he has since considerably softened) will cause some value-oriented investors to completely exclude cryptocurrencies and related assets from their portfolios. I will not wax poetically about the myriad of forms money has assumed across the ages, because it is already well-covered by more than one rarely read treatise. It should be said, though it may not need to be, that a community’s preferred medium of exchange is not arbitrary. The immovable wheels of Micronesia met the needs of their makers just as digital stores of value like Bitcoin will serve the sprawling financial archipelagos of tomorrow. This role will be facilitated by the ability of blockchains not just to store transactions, but to enforce the governing charter agreed upon by their participants.

Tokens are abstractions, a convenient means of allotting ownership. Bradley Rivetz, a venture capitalist, puts it like this: “everything that can be tokenized will be tokenized the Empire State Building will someday be tokenized, I’ll buy 1% of the Empire State Building, I’ll get every day credited to my wallet 1% of the rents minus expenses, I can borrow against my Empire State Building holding and if I want to sell the Empire State Building I hit a button and I instantly have the money.” Bitcoin and its unmodified copycats do not derive their value from anything tangible. However, this is not the case for all crypto projects. Supporters tout its deflationary design (which isn’t much of an advantage when there is no value to deflate), its modest transaction fees, the fact it is not treated as a currency by most tax codes (this is changing and liable to continue changing), and the relative anonymity it offers.

The fact that Bitcoin is still considered an asset in most jurisdictions is a strength. This means that since Bitcoin is de facto intermediary on most exchanges (most pairs are expressed in terms of BTC or a major fiat, many solely in BTC), one can buy and sell other tokens freely without worrying about capital gains taxes, which turn what should be wholly pleasurable into something akin to an ice cream sundae followed by a root canal. This applies to sales and corporate income taxes as well. A company like Walmart, despite its gross income, relies on a slender profit margin to appease its shareholders. While I’m not asking you to weep for the Waltons, I am asking you to think about the incentives for a company to begin experimenting with its own tax-free tokens as a means of improving customer spending power and building brand loyalty.

How many coins will be needed and, for that matter, how many niches they will be summoned to fill, remains unknown.  In his lecture on real estate Dr. Shiller mentions the Peruvian economist Hernando De Soto’s observation about the lack of accounting for most of the land in the world.  Needless to say, for these areas to advance economically, or any way for that matter, it is important to establish who owns what. Drafting deeds, transferring ownership of properties or other goods, and managing the laws of districts where local authorities are unreliable or otherwise impotent are services that are best provided by an inviolable ledger. In the absence of a central body, this responsibility will be assumed by blockchain. Projects like BitNation are bringing the idea of decentralized governance to the masses; efforts like Octaneum are beginning to integrate blockchain technology with multi-trillion dollar commodities markets.

As more than one author has contended, information is arguably the most precious resource of the twenty first century. It it is hardly scarce, but analysis is as vital to making sound decisions. Augur and Gnosis provide decentralized prediction markets. The latter, Kristin Houser describes it, is a platform used “to create a prediction market for any event, such as the Super Bowl or an art auction.” Philip Tetlock’s book on superforecasting covers the key advantages of crowdsourcing economic and geopolitical forecasting, namely accuracy and cost-effectiveness. Blockchains will not only generate data, but also assist in making sense of it.  While it is just a historical aside, it is good to remember that money, as Tymoigne and Wray (2006) note, was originally devised as a means of recording debt. Hazel sticks with notches preceded the first coins by hundreds of years. Money began as a unit of accounting, not a store of value.

MelonPort and Iconomi both allow anyone to start their own investment funds. Given that it is “just” software is the beauty of it: these programs can continue to be improved upon  indefinitely. If the old team loses its vim, the project can easily be forked. Where is crypto right now and why does it matter? There is a tendency for academics (and ordinary people) to think of things in the real world as static objects existing in some kind of Platonic heaven. This is a monumental mistake when dealing with an adaptive system, or in this case, a series of immature, interlocking, and rapidly evolving ecosystems. We have seen the first bloom – some pruning too – and as clever people find new uses for the underlying technology, particularly in the area of IoT and other emerging fields, we will see another bloom. The crypto bubble has come and gone, but the tsunami, replete with mature products with explicit functions, is just starting to take shape.

In the long run Warren Buffett, Shiller, and the rest will likely be right about Bitcoin itself, which has far fewer features than more recent arrivals. Its persisting relevance comes from brand recognition and the fact that most of the crypto infrastructure was built with it in mind. As the first comer it will remain the reserve currency of the crypto world.  It is nowhere near reaching any sort of hard cap. The total amount invested in crypto is still minuscule compared to older markets. Newcomers, unaware or wary of even well-established projects like Ethereum and Litecoin, will at first invest in what they recognize. Given that the barriers to entry (access to an Internet connection and a halfway-decent computer or phone) are set to continue diminishing, including in countries in which the fiat currency is unstable, demand should only be expected to climb.

Adam Alonzi is a writer, biotechnologist, documentary maker, futurist, inventor, programmer, and author of the novels A Plank in Reason and Praying for Death: A Zombie Apocalypse. He is an analyst for the Millennium Project, the Head Media Director for BioViva Sciences, and Editor-in-Chief of Radical Science News. Listen to his podcasts here. Read his blog here.

How Marcus Aurelius Influenced Adam Smith (No, Really) – Article by Paul Meany

How Marcus Aurelius Influenced Adam Smith (No, Really) – Article by Paul Meany

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The New Renaissance Hat
Paul Meany
******************************

Adam Smith’s appreciation for the Stoic emperor’s writings is evident in his own work.

Ancient Roman bust of Emperor Marcus Aurelius, in the Collection of Greek and Roman Antiquities in the Kunsthistorisches Museum, Vienna – Photograph by Gryffindor

Who Was Marcus Aurelius?

Marcus Aurelius Antoninus Augustus was the last of the five good emperors of Rome. He was born in 121 AD, reluctantly became emperor in 161 AD, and reigned for 19 years until his death in 180 AD. His reign was punctuated by numerous wars during which he repelled Rome’s enemies in long campaigns. When not at the frontiers of the empire, he spent his time administering the law, focusing his attention particularly on the guardianship of orphans, the manumission of slaves, and choosing city councilors.

Lord Acton memorably stated, “Power corrupts, absolute power corrupts, absolutely.” Lord Acton’s aphorism is, for the most part, true, but there was one exception to it in history: Marcus Aurelius. He famously had a keen interest in philosophy. Perpetually practicing self-control and moderation in all aspects of his life, he was the closest any person ever came to embodying Plato’s ideal of the “philosopher king.”

While on the front lines of his campaign against the German tribes, Marcus Aurelius wrote his own personal diary. This was originally titled Ta Eis Heauton, meaning To Himself in Greek. Subsequent translations of the text changed the title numerous times; we now know it as Meditations. In Meditations, Marcus Aurelius writes his personal views on the Stoic philosophy.

He focuses heavily on the themes of finding one’s place in the cosmic balance of the universe, the importance of analyzing your actions, and being a good person. Asserting that one should be judged first and foremost on their actions, he decisively urged us to “waste no more time arguing about what a good man should be. Be one.” Meditations is a masterpiece of Stoic philosophy, brimming with insightful, emotional and, most importantly, useful observations on morality and the human condition.

Who Was Adam Smith?

Adam Smith was a Scottish moral philosopher who is renowned as one of the first modern economists. He was born in 1723 in Kirkcaldy and died in 1790. He is famous for his two seminal works, The Wealth of Nations and The Theory of Moral Sentiments. His work was massively influential on classical liberal thought as he was one of the first defenders of the free market.

In The Wealth of Nations and The Theory of Moral Sentiments, Smith articulated a persuasive case for the efficacy and morality of a free-market commercial society. Ludwig Von Mises, speaking about Smith’s works, wrote that they “presented the essence of the ideology of freedom, individualism, and prosperity, with admirable clarity and in an impeccable literary form.” Classical liberal economist Milton Friedman often wore a tie bearing a portrait of Adam Smith to formal events.

Adam Smith’s Readings of Marcus Aurelius

These two figures lived in vastly different times, under vastly different circumstances, so how did Marcus Aurelius ever influence Adam Smith? The answer lies in the ancient philosophy of Stoicism.

Stoicism was one of the three major schools of Greek philosophy in the ancient world. It was founded in Athens in the 3rd century BC by a man named Zeno of Citium. The name “Stoic” was given to the followers of Zeno, who used to congregate to hear him teach at the Athenian Agora, under the colonnade known as the Stoa Poikile. Over time, Stoicism expanded and developed sophisticated views on metaphysics, epistemology, and ethics.

While Stoicism posits numerous views on a huge variety of topics, its most interesting and relevant observations are on ethics. The Stoics were concerned with perfecting self-control which allowed for virtuous behavior. They believed that, through self-control, one could be free of negative emotions and passions which blinded objective judgment.

With a peaceful mind, the Stoics thought, people could live according to the universal reason of the world and practice a virtuous life. Marcus Aurelius described the ideal Stoic life in book three of Meditations, writing, “peace of mind in the evident conformity of your actions to the laws of reason, and peace of mind under the visitations of a destiny you cannot control.”

Adam Smith was educated at the University of Glasgow where he studied under Francis Hutcheson. Hutcheson was a Scottish intellectual and a leading representative of the Christian Stoicism movement during the Scottish Enlightenment. He hosted private noontime classes on Stoicism which Adam Smith often attended. Smith’s preference for Marcus Aurelius was encouraged by Hutcheson, who published his own translation of Meditations.

In The Theory of Moral Sentiments, Smith referred to Marcus Aurelius as “the mild, the humane, the benevolent Antoninus,” demonstrating his deep admiration for the Stoic emperor. Marcus Aurelius influenced Adam Smith in three main areas: the idea of an inner conscience; the importance of self-control; and in his famous analogy of the “Invisible Hand.”

Our Inner Conscience

Both Marcus Aurelius and Adam Smith believed that the key to understanding morality was through self-scrutiny and sympathy for others.

Marcus Aurelius wrote Meditations in the form of a self-reflective dialogue with his inner self. He thought that moral conviction lay within “the very god that is seated in you, bringing your impulses under its control, scrutinizing your thoughts.’’ He interchangeably referred to this inner god as the soul or the helmsman and believed that it is a voice within you that attempts to sway you from immoral doings; we now call this a conscience.

Similarly, Smith emphasized the role of people’s innermost thoughts. A key aspect of Smith’s moral philosophy in The Theory of Moral Sentiments is the impartial spectator. Smith theorized that morality could be understood through the medium of sympathy. He thought that before people acted they ought to look for the approval of an impartial spectator.

“But though man has… been rendered the immediate judge of mankind, he has been rendered so only in the first instance; and an appeal lies from his sentence to a much higher tribunal, to the tribunal of their own consciences, to that of the supposed impartial and well-informed spectator, to that of the man within the breast, the great judge and arbiter of their conduct.”

The Importance of Self-Control

The Stoics listed four “cardinal virtues” — wisdom, justice, courage, and temperance — for which they held great reverence. These were believed to be expressions and manifestations of a single indivisible virtue. Smith used slightly different names, but he endorsed the same set of virtues and the idea that they were all facets of one indivisible virtue.

Smith and Aurelius had a mutual appreciation for the virtue of self-control. They both believed in an impartial, self-scrutinizing conscience that guided morality: while Aurelius called it the God Within, Smith called it the Impartial Spectator.

Marcus Aurelius said, “You have power over your mind — not outside events. Realize this, and you will find strength.” The primacy of self-control is intrinsic to the Stoic philosophy. In a similar vein of thought, Smith writes that “self-command is not only itself a great virtue, but from all other virtues seem to derive their principal lustre.” This respect for self-control was encouraged and cultivated by Smith’s Impartial Spectator and Marcus Aurelius’ Inner God.

The Invisible Hand

Marcus Aurelius argues that we must work together in common cooperation in order to improve humanity as a whole. He argues that we “were born to work together.” Aurelius stressed the vital nature of human cooperation.

“Constantly think of the universe as one living creature, embracing one being and soul; how all is absorbed into the one consciousness of this living creature; how it compasses all things with a single purpose, and how all things work together to cause all that comes to pass, and their wonderful web and texture.”

In The Wealth of Nations and The Theory of Moral Sentiments, Adam Smith’s defense of the free market is expressed through the analogy of the Invisible Hand. Smith argues that in a society of free exchange and free markets, people must sympathize with one another and understand how best to benefit their fellow man in order to better their own situation.

“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.”

The transaction will not occur unless the parties involved demonstrate their sympathy for the interests of others. In the analogy of the Invisible Hand, Smith argues that we must think of others before ourselves and consider how best to serve our fellow neighbor. This famous passage bears a striking resemblance to the previous passage by Marcus Aurelius who also argues for the importance of conscious cooperation among people for the common good.

We Are All Standing on the Shoulders of Giants

A Roman emperor seems like an unlikely intellectual influence for a classical liberal thinker such as Adam Smith. Upon closer inspection, however, Smith and Aurelius are like two peas in a pod: both men believed that the root of morality lies within the self-scrutiny of one’s conscience; both believe in the primacy of the virtue of self-control; and both believe in the importance of sympathy as a tool for cooperation and the betterment of civilized society.

No thinker is entirely alone in their pursuit of truth. All people discover truth by building upon the previous discoveries of others. This explains how an emperor came to influence so strongly an Enlightenment moral philosopher and economist more than a thousand years after he had passed away. I believe that the best expression of the development of such ideas was written by a medieval philosopher and bishop, John of Salisbury, who spoke of the wisdom of Bernard of Chartres:

“He pointed out that we see more and farther than our predecessors, not because we have keener vision or greater height, but because we are lifted up and borne aloft on their gigantic stature.”

We are all dwarfs standing on the shoulders of giants in the pursuit of the system of natural liberty and prosperity that Adam Smith sought during his lifetime.

Paul Meany is a student at Trinity College Dublin studying Ancient and Medieval History and Culture.

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.

U.S. Transhumanist Party / Institute of Exponential Sciences Discussion Panel on Cryptocurrencies

U.S. Transhumanist Party / Institute of Exponential Sciences Discussion Panel on Cryptocurrencies

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Gennady Stolyarov II
Demian Zivkovic
Chantha Lueung
Laurens Wes
Moritz Bierling

On Sunday, February 18, 2018, the U.S. Transhumanist Party and Institute of Exponential Sciences hosted an expert discussion panel on how cryptocurrencies and blockchain-based technologies will possibly affect future economies and everyday life. Panelists were asked about their views regarding what is the most significant promise of cryptocurrencies, as well as what are the most significant current obstacles to its realization.

Gennady Stolyarov II, Chairman of the U.S. Transhumanist Party, and Demian Zivkovic, President of the Institute of Exponential Sciences, are the moderators for this panel.

Panelists

Moritz Bierling

Moritz Bierling, in his work for Exosphere Academy – a learning and problem-solving community – has organized a Space Elevator bootcamp, an Artificial Intelligence conference, and an Ethereum training course while also authoring a Primer on the emerging discipline of Alternate Reality Design. As Blockchain Reporter for the Berlin blockchain startup Neufund, he has educated the city’s Venture Capital and startup scene, as well as the broader public on the applications of this groundbreaking technology. His work has appeared in a number of blockchain-related and libertarian media outlets such as CoinTelegraph, The Freeman’s Perspective, Bitcoin.com, and the School Sucks Project. See his website at MoritzBierling.com.

Chantha Lueung

Chantha Lueung is the creator of Crypto-city.com, which is a social-media website focused on building the future world of cryptocurrencies by connecting crypto-enthusiasts and the general public about cryptocurrencies. He is a full-time trader and also participates in the HyperStake coin project, which is a Bitcoin alternative that uses the very energy-efficient Proof of Stake protocol, also known as POS.

Laurens Wes

Laurens Wes is a Dutch engineer and chief engineering officer at the Institute of Exponential Sciences. Furthermore he is the owner of Intrifix, a company focused on custom 3D-printed products and software solutions. He has also studied Artificial Intelligence and is very interested in transhumanism, longevity, entrepreneurship, cryptocurrencies/blockchain technology, and art (and a lot more). He is a regular speaker for the IES and is very committed to educating the public on accelerated technological developments and exponential sciences.

The YouTube question/comment chat for this Q&A session has been archived here and is also provided below.

Visit the U.S. Transhumanist Party Facebook page here.

See the U.S. Transhumanist Party FAQ here.

Become a member of the U.S. Transhumanist Party for free, no matter where you reside.

Become a Foreign Ambassador for the U.S. Transhumanist Party.

References

Chat Log from the Panel Discussion on Cryptocurrencies of February 18, 2018

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Review of Philip Tetlock’s “Superforecasting” – Article by Adam Alonzi

Review of Philip Tetlock’s “Superforecasting” – Article by Adam Alonzi

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The New Renaissance Hat
Adam Alonzi
******************************
Alexander Consulting the Oracle of Apollo, Louis Jean Francois Lagrenée. 1789, Oil on Canvas.

“All who drink of this treatment recover in a short time, except those whom it does not help, who all die. It is obvious, therefore, that it fails only in incurable cases.”

-Galen

Before the advent of evidence-based medicine, most physicians took an attitude like Galen’s toward their prescriptions. If their remedies did not work, surely the fault was with their patient. For centuries scores of revered doctors did not consider putting bloodletting or trepanation to the test. Randomized trials to evaluate the efficacy of a treatment were not common practice. Doctors like Archie Cochrane, who fought to make them part of standard protocol, were met with fierce resistance. Philip Tetlock, author of Superforecasting: The Art and Science of Prediction (2015), contends that the state of forecasting in the 21st century is strikingly similar to medicine in the 19th. Initiatives like the Good Judgement Project (GJP), a website that allows anyone to make predictions about world events, have shown that even a discipline that is largely at the mercy of chance can be put on a scientific footing.

More than once the author reminds us that the key to success in this endeavor is not what you think or what you know, but how you think. For Tetlock pundits like Thomas Friedman are the “exasperatingly evasive” Galens of the modern era. In the footnotes he lets the reader know he chose Friedman as target strictly because of his prominence. There are many like him. Tetlock’s academic work comparing random selections with those of professionals led media outlets to publish, and a portion of their readers to conclude, that expert opinion is no more accurate than a dart-throwing chimpanzee. What the undiscerning did not consider, however, is not all of the experts who participated failed to do better than chance.

Daniel Kahneman hypothesized that “attentive readers of the New York Times…may be only slightly worse” than these experts corporations and governments so handsomely recompense. This turned out to be a conservative guess. The participants in the Good Judgement Project outperformed all control groups, including one composed of professional intelligence analysts with access to classified information. This hodgepodge of retired bird watchers, unemployed programmers, and news junkies did 30% better than the “pros.” More importantly, at least to readers who want to gain a useful skillset as well as general knowledge, the managers of the GJP have identified qualities and ways of thinking that separate “superforecasters” from the rest of us. Fortunately they are qualities we can all cultivate.

While the merits of his macroeconomic theories can be debated, John Maynard Keynes was an extremely successful investor during one of the bleakest periods in international finance. This was no doubt due in part to his willingness to make allowance for new information and his grasp of probability. Participants in the GJP display open-mindedness, an ability and willingness to repeatedly update their forecasts, a talent to neither under- nor over-react to new information by putting it into a broader context,  and a predilection for mathematical thinking (though those interviewed admitted they rarely used an explicit equation to calculate their answer). The figures they give also tend to be more precise than their less successful peers. This “granularity” may seem ridiculous at first. I must confess that when I first saw estimates on the GJP of 34% or 59%, I would chuckle a bit. How, I asked myself, is a single percentage point meaningful? Aren’t we just dealing with rough approximations? Apparently not.

Tetlock reminds us that the GJP does not deal with nebulous questions like “Who will be president in 2027?” or “Will a level 9 earthquake hit California two years from now?” However, there are questions that are not, in the absence of unforeseeable Black Swan events, completely inscrutable. Who will win the Mongolian presidency? Will Uruguay sign a trade agreement with Laos in the next six months? These are parts of highly complex systems, but they can be broken down into tractable subproblems.

Using numbers instead of words like “possibly”, “probably”, “unlikely”, etc., seems unnatural. It gives us wiggle room and plausible deniability. They also cannot be put on any sort of record to keep score of how well we’re doing. Still, to some it may seem silly, pedantic, or presumptuous. If Joint Chiefs of Staff had given the exact figure they had in mind (3 to 1) instead of the “fair chance” given to Kennedy, the Bay of Pigs debacle may have never transpired. Because they represent ranges of values instead of single numbers, words can be retroactively stretched or shrunk to make blunders seem a little less avoidable. This is good for advisors looking to cover their hides by hedging their bets, but not so great for everyone else.

If American intelligence agencies had presented the formidable but vincible figure of 70% instead of a “slam dunk” to Congress, a disastrous invasion and costly occupation would have been prevented. At this point it is hard not to see the invasion as anything as a mistake, but even amidst these emotions we must be wary of hindsight. Still, a 70% chance of being right means there is a 30% chance of being wrong. It is hardly a “slam dunk.” No one would feel completely if an oncologist told them they are 70% sure the growth is not malignant. There are enormous consequences to sloppy communications. However, those with vested interests are more than content with this approach if it agrees with them, even if it ends up harming them.

When Nate Silver put the odds of the 2008 election in Obama’s favor, he was panned by Republicans as a pawn of the liberal media. He was quickly reviled by Democrats when he foresaw a Republican takeover of the Senate. It is hard to be a wizard when the king, his court, and all the merry peasants sweeping the stables would not know a confirmation bias from their right foot. To make matters worse, confidence is widely equated with capability. This seems to be doubly true of groups of people, particularly when they are choosing a leader. A mutual-fund manager who tells his clients they will see great returns on a company is viewed as stronger than a Poindexter prattling on about Bayesian inference and risk management.

The GJP’s approach has not spread far — yet. At this time most pundits, consultants, and self-proclaimed sages do not explicitly quantify their success rates, but this does not stop corporations, NGOs, and institutions at all levels of government from paying handsomely for the wisdom of untested soothsayers. Perhaps they have a few diplomas, but most cannot provide compelling evidence for expertise in haruspicy (sans the sheep’s liver). Given the criticality of accurate analyses to saving time and money, it would seem as though a demand for methods to improve and assess the quality of foresight would arise. Yet for the most part individuals and institutions continue to happily grope in the dark, unaware of the necessity for feedback when they misstep — afraid of having their predictions scrutinized or having to take the pains to scrutinize their predictions.

David Ferrucci is wary of the “guru model” to settling disputes. No doubt you’ve witnessed or participated in this kind of whimpering fracas: one person presents a Krugman op-ed to debunk a Niall Ferguson polemic, which is then countered with a Tommy Friedman book, which was recently excoriated  by the newest leader of the latest intellectual cult to come out of the Ivy League. In the end both sides leave frustrated. Krugman’s blunders regarding the economic prospects of the Internet, deflation, the “imminent” collapse of the euro (said repeatedly between 2010 and 2012) are legendary. Similarly, Ferguson, who strongly petitioned the Federal Reserve to reconsider quantitative easing, lest the United States suffer Weimar-like inflation, has not yet been vindicated. He and his colleagues responded in the same way as other embarrassed prophets: be patient, it has not happened, but it will! In his defense, more than one clever person has criticized the way governments calculate their inflation rates…

Paul Ehrlich, a darling of environmentalist movement, has screeched about the detonation of a “population bomb” for decades. Civilization was set to collapse between 15 and 30 years from 1970. During the interim 100 to 200 million would annually starve to death, by the year 2000 no crude oil would be left, the prices of raw materials would skyrocket, and the planet would be in the midst of a perpetual famine. Tetlock does not mention Ehrlich, but he is, particularly given his persisting influence on Greens, as or more deserving of a place in this hall of fame as anyone else. Larry Kudlow continued to assure the American people that the Bush tax breaks were producing massive economic growth. This continued well into 2008, when he repeatedly told journalists that America was not in a recession and the Bush boom was “alive and well.” For his stupendous commitment to his contention in the face of overwhelming evidence to the contrary, he was nearly awarded a seat in the Trump cabinet.

This is not to say a mistake should become the journalistic equivalent of a scarlet letter. Kudlow’s slavish adherence to his axioms is not unique. Ehrlich’s blindness to technological advances is not uncommon, even in an era dominated by technology. By failing to set a timeline or give detailed causal accounts, many believe they have predicted every crash since they learned how to say the word. This is likely because they begin each day with the same mantra: “the market will crash.”  Yet through an automatically executed routine of psychological somersaults, they do not see they were right only once and wrong dozens, hundreds, or thousands of times. This kind of person is much more deserving of scorn than a poker player who boasts about his victories, because he is (likely) also aware of how often he loses. At least he’s not fooling himself. The severity of Ehrlich’s misfires is a reminder of what happens when someone looks too far ahead while assuming all things will remain the same. Ceteris paribus exists only in laboratories and textbooks.

Axioms are fates accepted by different people as truth, but the belief in Fate (in the form of retroactive narrative construction) is a nearly ubiquitous stumbling block to clear thinking. We may be far removed from Sophocles, but the unconscious human drive to create sensible narratives is not peculiar to fifth-century B.C. Athens. A questionnaire given to students at Northwestern showed that most believed things had turned out for the best even if they had gotten into their first pick. From an outsider’s perspective this is probably not true. In our cocoons we like to think we are in the right place either through the hand of fate or through our own choices. Atheists are not immune to this Panglossian habit. Our brains are wired for stories, but the stories we tell ourselves about ourselves seldom come out without distortions. We can gain a better outside view, which allows us to see situations from perspectives other than our own, but only through regular practice with feedback. This is one of the reasons groups are valuable.

Francis Galton asked 787 villagers to guess the weight of an ox hanging in the market square. The average of their guesses (1,197 lbs) turned out to be remarkably close to its actual weight (1,198 lbs). Scott Page has said “diversity trumps ability.” This is a tad bold, since legions of very different imbeciles will never produce anything of value, but there is undoubtedly a benefit to having a group with more than one point of view. This was tested by the GJP. Teams performed better than lone wolves by a significant margin (23% to be exact). Partially as a result of encouraging one another and building a culture of excellence, and partially from the power of collective intelligence.

“No battle plan survives contact with the enemy.”

-Helmuth von Moltke

“Everyone has a plan ’till they get punched in the mouth.”

-Mike Tyson

When Archie Cochrane was told he had cancer by his surgeon, he prepared for death. Type 1 thinking grabbed hold of him and did not doubt the diagnosis. A pathologist later told him the surgeon was wrong. The best of us, under pressure, fall back on habitual modes of thinking. This is another reason why groups are useful (assuming all their members do not also panic). Organizations like the GJP and the Millennium Project are showing how well collective intelligence systems can perform. Helmuth von Moltke and Mike Tyson aside, a better motto, substantiated by a growing body of evidence, comes from Dwight  Eisenhower: “plans are useless, but planning is indispensable.”

Adam Alonzi is a writer, biotechnologist, documentary maker, futurist, inventor, programmer, and author of the novels A Plank in Reason and Praying for Death: A Zombie Apocalypse. He is an analyst for the Millennium Project, the Head Media Director for BioViva Sciences, and Editor-in-Chief of Radical Science News. Listen to his podcasts here. Read his blog here.

The World’s Poorest People Are Getting Richer Faster Than Anyone Else – Article by Alexander Hammond

The World’s Poorest People Are Getting Richer Faster Than Anyone Else – Article by Alexander Hammond

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The New Renaissance Hat
Alexander Hammond
October 29, 2017
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Last Tuesday marked the 25th anniversary of the United Nations’ International Day for the Eradication of Poverty. The date intentionally coincides with the 30th anniversary of the Call to Action, which saw the French anti-poverty campaigner Father Joseph Wresinski ask the international community, in front of 100,000 Parisians, to “strive to eradicate extreme poverty”.

To mark the occasion, Antonio Guterres, the United Nations Secretary-General, was featured in a short video assessing the current state of world poverty. Despite noting such issues as unemployment, inequality, and conflict continuing in some regions, Guterres correctly observed that since 1990 the world has made “remarkable progress in eradicating poverty.”

While it is valuable to acknowledge that problems remain, it is important to reflect on just how far we’ve come.

Alleviating Poverty Fast

The speed of poverty alleviation in the last 25 years has been historically unprecedented. Not only is the proportion of people in poverty at a record low, but, in spite of adding 2 billion to the planet’s population, the overall number of people living in extreme poverty has fallen, too.

As Johan Norberg writes in his book Progress, “If you had to choose a society to live in but did not know what your social or economic position would be, you would probably choose the society with the lowest proportion (not the lowest numbers) of poor, because this is the best judgement of the life of an average citizen.” Well, in 1820, 94 percent of the world’s population lived in extreme poverty (less than $1.90 per day adjusted for purchasing power). In 1990 this figure was 34.8 percent, and in 2015, just 9.6 percent.

In the last quarter century, more than 1.25 billion people escaped extreme poverty – that equates to over 138,000 people (i.e., 38,000 more than the Parisian crowd that greeted Father Wresinski in 1987) being lifted out of poverty every day. If it takes you five minutes to read this article, another 480 people will have escaped the shackles of extreme of poverty by the time you finish. Progress is awesome. In 1820, only 60 million people didn’t live in extreme poverty. In 2015, 6.6 billion did not.

Now let’s consider those people who are still trapped in extreme poverty. The Oxford University scholar Max Roser’s website, Our World in Data, used World Bank databases to estimate that in 2013, there were 746 million people living in extreme poverty. Of these people, slightly more than 380 million resided in Africa, with Nigeria being home to largest number (86 million). Meanwhile, 327 million of those in extreme poverty lived in Asia, with India having the largest proportion by far (218 million). China had 25 million. The remaining 35 million lived in South America (19 million), North America (13 million), Oceania (2.5 million) and Europe (0.7 million.)

Put differently, of those who live in extreme poverty, over 40 percent resided in just two nations: India and Nigeria.

The Poorest of the Poor

Since its economic liberalization reforms in 1991, India’s average income has increased by 7.5 percent per year. That means that average income has more than tripled over the last quarter century. As wealth increased, the poverty rate in India declined by almost 24 percent. But most significantly, for the Dalits – the poorest and lowest caste in Indian society – the poverty rate during this period declined even faster, by 31 percent. That means that in the nation that has by far the largest number of people in extreme poverty, it is the people at the very bottom of the social strata who are getting richer faster.

A similar trend can be seen in Nigeria. Since the new millennium, gross domestic income per capita has increased by over 800 percent, from $270 to over $2,450. There is much work to be done, but this level of progress shows that even in the poorest countries, the speed of economic growth is encouraging.

In order to help the poorest, consider the impact free-market capitalism has had in the last 200 years in alleviating extreme poverty. The Industrial Revolution turned the once-impoverished western countries into abundant societies. The new age of globalization, which started around 1980, saw the developing world enter the global economy and resulted in the largest escape from poverty ever recorded. That is something that the late Father Wresinski would have been eager to celebrate.

Alexander C. R. Hammond is the Research Assistant for HumanProgress.org, a project of the Cato Institute’s Center for Global Liberty and Prosperity. He writes about economic freedom, globalization, and human well-being.

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.

Why Robots Won’t Cause Mass Unemployment – Article by Jonathan Newman

Why Robots Won’t Cause Mass Unemployment – Article by Jonathan Newman

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Jonathan Newman
August 5, 2017
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I made a small note in a previous article about how we shouldn’t worry about technology that displaces human workers:

The lamenters don’t seem to understand that increased productivity in one industry frees up resources and laborers for other industries, and, since increased productivity means increased real wages, demand for goods and services will increase as well. They seem to have a nonsensical apocalyptic view of a fully automated future with piles and piles of valuable goods everywhere, but nobody can enjoy them because nobody has a job. I invite the worriers to check out simple supply and demand analysis and Say’s Law.

Say’s Law of markets is a particularly potent antidote to worries about automation, displaced workers, and the so-called “economic singularity.” Jean-Baptiste Say explained how over-production is never a problem for a market economy. This is because all acts of production result in the producer having an increased ability to purchase other goods. In other words, supplying goods on the market allows you to demand goods on the market.

Say’s Law, Rightly Understood

J.B. Say’s Law is often inappropriately summarized as “supply creates its own demand,” a product of Keynes having “badly vulgarized and distorted the law.”

Professor Bylund has recently set the record straight regarding the various summaries and interpretations of Say’s Law.

Bylund lists the proper definitions:

Say’s Law:

  • Production precedes consumption.
  • Demand is constituted by supply.
  • One’s demand for products in the market is limited by one’s supply.
  • Production is undertaken to facilitate consumption.
  • Your supply to satisfy the wants of others makes up your demand for for others’ production.
  • There can be no general over-production (glut) in the market.

NOT Say’s Law:

  • Production creates its own demand.
  • Aggregate supply is (always) equal to aggregate demand.
  • The economy is always at full employment.
  • Production cannot exceed consumption for any good.

Say’s Law should allay the fears of robots taking everybody’s jobs. Producers will only employ more automated (read: capital-intensive) production techniques if such an arrangement is more productive and profitable than a more labor-intensive technique. As revealed by Say’s Law, this means that the more productive producers have an increased ability to purchase more goods on the market. There will never be “piles and piles of valuable goods” laying around with no one to enjoy them.

Will All the Income Slide to the Top?

The robophobic are also worried about income inequality — all the greedy capitalists will take advantage of the increased productivity of the automated techniques and fire all of their employees. Unemployment will rise as we run out of jobs for humans to do, they say.

This fear is unreasonable for three reasons. First of all, how could these greedy capitalists make all their money without a large mass of consumers to purchase their products? If the majority of people are without incomes because of automation, then the majority of people won’t be able to help line the pockets of the greedy capitalists.

Second, there will always be jobs because there will always be scarcity. Human wants are unlimited, diverse, and ever-changing, yet the resources we need to satisfy our desires are limited. The production of any good requires labor and entrepreneurship, so humans will never become unnecessary.

Finally, Say’s Law implies that the profitability of producing all other goods will increase after a technological advancement in the production of one good. Real wages can increase because the greedy robot-using capitalists now have increased demands for all other goods. I hope the following scenario makes this clear.

The Case of the Robot Fairy

This simple scenario shows why the increased productivity of a new, more capital-intensive technique makes everybody better off in the end.

Consider an island of three people: Joe, Mark, and Patrick. The three of them produce coconuts and berries. They prefer a varied diet, but they have their own comparative advantages and preferences over the two goods.

Patrick prefers a stable supply of coconuts and berries every week, and so he worked out a deal with Joe such that Joe would pay him a certain wage in coconuts and berries every week in exchange for Patrick helping Joe gather coconuts. If they have a productive week, Joe gets to keep the extra coconuts and perhaps trade some of the extra coconuts for berries with Mark. If they have a less than productive week, then Patrick still receives his certain wage and Joe has to suffer.

On average, Joe and Patrick produce 50 coconuts/week. In exchange for his labor, Patrick gets 10 coconuts and 5 quarts of berries every week from Joe.

Mark produces the berries on his own. He produces about 30 quarts of berries every week. Joe and Mark usually trade 20 coconuts for 15 quarts of berries. Joe needs some of those berries to pay Patrick, but some are for himself because he also likes to consume berries.

In sum, and for an average week, Joe and Patrick produce 50 coconuts and Mark produces 30 quarts of berries. Joe ends up with 20 coconuts and 10 quarts of berries, Patrick ends up with 10 coconuts and 5 quarts of berries, and Mark ends up with 20 coconuts and 15 quarts of berries.

Production Trade Consumption
Joe 50 Coconuts (C) Give 20C for 15B 20C + 10B
Patrick n/a 10C + 5B (wage)
Mark 30 qts. Berries (B) Give 15B for 20C 20C + 15B

The Robot Fairy Visits

One night, the robot fairy visits the island and endows Joe with a Patrick 9000, a robot that totally displaces Patrick from his job, plus some. With the robot, Joe can now produce 100 coconuts per week without the human Patrick.

What is Patrick to do? Well, he considers two options: (1) Now that the island has plenty of coconuts, he could go work for Mark and pick berries under a similar arrangement he had with Joe; or (2) Patrick could head to the beach and start catching some fish, hoping that Joe and Mark will trade with him.

While these options weren’t Patrick’s top choices before the robot fairy visited, now they are great options precisely because Joe’s productivity has increased. Joe’s increased productivity doesn’t just mean that he is richer in terms of coconuts, but his demands for berries and new goods like fish increase as well (Say’s Law), meaning the profitability of producing all other goods that Joe likes also increases!

Option 1

If Patrick chooses option 1 and goes to work for Mark, then both berry and coconut production totals will increase. Assuming berry production doesn’t increase as much as coconut production, the price of a coconut in terms of berries will decrease (Joe’s marginal utility for coconuts will also be very low), meaning Mark can purchase many more coconuts than before.

Suppose Patrick adds 15 quarts of berries per week to Mark’s production. Joe and Mark could agree to trade 40 coconuts for 20 quarts of berries, so Joe ends up with 60 coconuts and 20 quarts of berries. Mark can pay Patrick up to 19 coconuts and 9 quarts of berries and still be better off compared to before Joe got his Patrick 9000 (though Patrick’s marginal productivity would warrant something like 12 coconuts and 9 quarts of berries or 18 coconuts and 6 quarts of berries or some combination between those — no matter what, everybody is better off).

Production Trade Consumption
Joe 100C Give 40C for 20B 60C + 20B
Patrick 45B n/a 16C + 7B (wage)
Mark Give 20B for 40C 24C + 18B

Option 2

If Mark decides to reject Patrick’s offer to work for him, then Patrick can choose option 2, catching fish. It involves more uncertainty than what Patrick is used to, but he anticipates that the extra food will be worth it.

Suppose that Patrick can produce just 5 fish per week. Joe, who is practically swimming in coconuts pays Patrick 20 coconuts for 1 fish. Mark, who is excited about more diversity in his diet and even prefers fish to his own berries, pays Patrick 10 quarts of berries for 2 fish. Joe and Mark also trade some coconuts and berries.

In the end, Patrick gets 20 coconuts, 10 quarts of berries, and 2 fish per week. Joe gets 50 coconuts, 15 quarts of berries, and 1 fish per week. Mark gets 30 coconuts, 5 quarts of berries, and 2 fish per week. Everybody prefers their new diet.

Production Trade Consumption
Joe 100C Give 50C for 15B + 1F 50C + 15B + 1F
Patrick 5 fish (F) Give 2F for 20C + 10B 20C + 10B + 2F
Mark 30B Give 25B for 30C + 1F 30C + 5B + 2F

Conclusion

The new technology forced Patrick to find a new way to sustain himself. These new jobs were necessarily second-best (at most) to working for Joe in the pre-robot days, or else Patrick would have pursued them earlier. But just because they were suboptimal pre-robot does not mean that they are suboptimal post-robot. The island’s economy was dramatically changed by the robot, such that total production (and therefore consumption) could increase for everybody. Joe’s increased productivity translated into better deals for everybody.

Of course, one extremely unrealistic aspect of this robot fairy story is the robot fairy. Robot fairies do not exist, unfortunately. New technologies must be wrangled into existence by human labor and natural resources, with the help of capital goods, which also must be produced using labor and natural resources. Also, new machines have to be maintained, replaced, refueled, and rejiggered, all of which require human labor. Thus, we have made this scenario difficult for ourselves by assuming away all of the labor that would be required to produce and maintain the Patrick 9000. Even so, we see that the whole economy, including the human Patrick, benefits as a result of the new robot.

This scenario highlights three important points:

(1) Production must precede consumption, even for goods you don’t produce (Say’s Law). For Mark to consume coconuts or fish, he has to supply berries on the market. For Joe to consume berries or fish, he has to supply coconuts on the market. Patrick produced fish so that he could also enjoy coconuts and berries.

(2) Isolation wasn’t an option for Patrick. Because of the Law of Association (a topic not discussed here, but important nonetheless), there is always a way for Patrick to participate in a division of labor and benefit as a result, even after being displaced by the robot.

(3) Jobs will never run out because human wants will never run out. Even if our three island inhabitants had all of the coconuts and berries they could eat before the robot fairy visited, Patrick was able to supply additional want satisfaction with a brand new good, the fish. In the real world, new technologies often pave the way for brand new, totally unrelated goods to emerge and for whole economies to flourish. Hans Rosling famously made the case that the advent of the washing machine allowed women and their families to emerge from poverty:

And what’s the magic with them? My mother explained the magic with this machine the very, very first day. She said, “Now Hans, we have loaded the laundry. The machine will make the work. And now we can go to the library.” Because this is the magic: you load the laundry, and what do you get out of the machine? You get books out of the machines, children’s books. And mother got time to read for me. She loved this. I got the “ABC’s” — this is where I started my career as a professor, when my mother had time to read for me. And she also got books for herself. She managed to study English and learn that as a foreign language. And she read so many novels, so many different novels here. And we really, we really loved this machine.

And what we said, my mother and me, “Thank you industrialization. Thank you steel mill. Thank you power station. And thank you chemical processing industry that gave us time to read books.”

Similarly, the Patrick 9000, a coconut-producing robot, made fish production profitable. Indeed, when we look at the industrial revolution and the computer revolution, we do not just see an increase in the production of existing goods. We see existing goods increasing in quantity and quality; we see brand new consumption goods and totally new industries emerging, providing huge opportunities for employment and future advances in everybody’s standard of living.

Jonathan Newman is Assistant Professor of Economics and Finance at Bryan College. He earned his PhD at Auburn University and is a Mises Institute Fellow. He can be contacted here.

Must Everything Be Made of Corn? – Article by Jeffrey A. Tucker

Must Everything Be Made of Corn? – Article by Jeffrey A. Tucker

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Jeffrey A. Tucker
July 27, 2017
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This article was originally published by the Foundation for Economic Education on November 28, 2016.

I’ve finished Thanksgiving leftovers and I’m digging into a store-bought blueberry pie, because few people have time to make such a pie from scratch. Crust should be made from flour and lard (which comes from pig), in my view, but when you buy from the store, the crust is almost always made from “shortening” which is a vegetable product.

Meaning: corn.

Then there is the pie filling. Usually at home, you would use sugar from cane to sweeten the berries. But when you buy from the store, the berries are sweetened from a syrup made also from  corn.

So here you have two ingredients in the making of this pie that are radically dissimilar: sugar cane and a pig. Hard to think of anything in common between the two. They have both been displaced as ingredients by one thing: corn.

Once you realize this – that the crust and the berries are living within the same core food group of corn – your mind stops playing tricks on you. There is a sense in which the whole thing, despite all looks and extraneous flavors, is a corn pie.

Suddenly, you can taste exactly that.

Now, it is time for the after dinner drink, perhaps a Margarita sweetened with lime juice. You look at the ingredients of that juice bottle.

Corn again! You are going to drink corn.

So you go for a chocolate but then take a look at the wrapper: corn!

So you decide to go for a drive in your gasoline-powered car. What’s in the tank? Thanks to the mandated additive of ethanol, there is corn here too.

By the time you get to the movie theater and consider popcorn, you remember that you had corn in your crust, corn in your berries, corn in your cocktail, and corn in your gas tank. Who needs corn popped in corn oil covered with butter-flavored corn?

So, instead of popcorn, and since most candy consists of different shapes of corn, you decide to settle for just a soda.

What’s in it? High-fructose corn syrup!

It’s too much! You feel like you’re trapped in a Twilight Zone episode: like your night is going to end in one of those cornfield chase scenes you see in horror movies.

Why does the whole of American life sometimes seem to be taken over by corn?

To be sure, corn is a miracle food. But is it really so miraculous that everything we use should be made out of it?

The Politics of Corn

Only if the market brings about this result. But it’s not the market speaking. It’s a deeply distorted market. The power of the corn lobby is legendary. And mixed with that is the power of the sugar lobby, which keeps out imported sugar that would sell for half as much as we pay at the store, thereby incentivizing producers to seek out a substitute in corn, which turns out to make us fatter, thereby panicking do-gooders who try to ban products and limit consumption, so that our bad health will stop driving up health-insurance rates.

Remarkably, all of this has happened only since the 1970s, before which there was no such thing as high-fructose corn syrup, to say nothing of corn-based gasoline. It’s one intervention piled on top of another one.

Foreign peoples find all of this mystifying. Indeed it is, until you look more deeply and see just how important the corn states are in winning elections. It turns out that the main and most valuable products generated by all this strange corn-based activity are political careers.

It’s for this reason that we have corn coming out of our ears.

Christmas Corn

Don’t despair: we’ve got Christmas to look forward to, with corn-candied apples, corn-sweetened eggnog, ham from corn-fed pigs glazed with corn, perhaps a roast from a corn-fed cow, and that old favorite, mulled cider on the stove filling the house with the traditional and evocative smell of corn.

After you have decorated your tree with strings of popcorn and candy canes made with corn syrup, don’t forget to forget to leave Santa cookies, baked with corn oil and corn sugar, because, as everyone knows, nothing says the holidays – or any day! – like corn.

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.

When Academia Turns into Fight Club – Article by Steven Horwitz

When Academia Turns into Fight Club – Article by Steven Horwitz

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Steven Horwitz
July 14, 2017
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What do academics do for excitement over the summer, you ask? This summer many of us have been engaged in a furious debate over the new book Democracy in Chains by Duke historian Nancy MacLean.

Libertarian and conservative scholars from a variety of disciplines have raised a number of criticisms about MacLean’s sources and her accuracy about historical facts that call into question the “evidence” she has to show that economist James Buchanan and public choice theory, if not libertarianism more generally, are all tools of racist oligarchs like the Koch Brothers.

Rather than rehash all of the particular criticisms, I want to focus on the controversy that has developed over the criticisms themselves. It’s important to understand that the libertarian critics of MacLean have carefully compared passages in her book with her cited sources and showed how she has misread and quoted selectively from them, often leading her to attribute to people the exact opposite of the argument they actually held. These criticisms have been posted publicly on blogs and websites. These are not just vague accusations. They are detailed examples of poor scholarship.

But the fascinating part has been her response. And her lack thereof.

Everyone Is under Attack

MacLean has offered no substantive response to the detailed criticisms. She had one exchange with Russ Roberts over her treatment of Tyler Cowen, but even there she did not respond to the substance of Russ’s concerns. Other than that, nothing.

What she did do, however, was put up a long Facebook post that reads like a combination conspiracy theory tract and call to action for progressive activists. The short version is that she claimed she was under “attack” from a conspiracy of “Koch operatives” who were paid hacks out to destroy her book and her reputation and silence her. She claimed, then retracted when she found out it couldn’t be done, that the Kochs had bought Google results to put the critics at the top of searches. She encouraged her supporters to game the Amazon reviews by posting positive reviews and down-voting the “fake” Koch reviews.

She has continued this narrative of being “under attack” in various interviews, and most recently in a story in Inside Higher Ed, where fellow progressives echo this language.

This notion of being “attacked” is particularly fascinating to me. Let’s be clear what she means: people who know a lot about Buchanan, public choice theory, and libertarianism have taken issue with her scholarship and have patiently and carefully documented the places where she has made errors of fact or interpretation, or mangled and misused source materials and quotes. That is all that they have done.

None of this was coordinated nor was it part of a conspiracy from the Koch brothers. It was scholars doing what scholars do when they are confronted with bad scholarly work, especially when it touches on issues we know well.

None of these critics, and I am among them, have called for physical violence against her. None have contacted her employer. None have called her publisher or Amazon to have the book taken down. Contrary to her claim, the only silence in this whole episode is her own refusal to respond to legitimate scholarly criticism. We don’t want to silence her – we eagerly await her response.

So where is this language of “attack” coming from? Here is where I think the political right bears some responsibility for the current situation. And to the degree libertarians have cast their lot with “the right,” we are seen as guilty by association. Call it blowback if you will.

In the last year or two, progressive intellectuals and academics have been threatened with violence and had their employers contacted, not to mention threats made from politicians, on the basis of public statements they’ve made. Yes, some of those statements were deplorable, but that is no excuse for threatening people’s physical safety or their jobs. These are real attacks, not intellectual criticisms.

We should also not forget the anti-intellectual “Professor Watch List” put up by TurningPoint USA, which gave left-leaning faculty more reason to imagine coordinated and conspiratorial attacks.

And yes, all of this was not done by conservative or libertarian intellectuals, but they were done by activists associated with “the right,” and that is all that progressives need to find the intellectuals guilty by association.

It probably also matters, though less so, that many conservative and libertarian students have referred to themselves as “under attack” in college classrooms. In my 30 years of teaching experience, what they call “under attack” is far more often than not simply having their views strongly challenged and being expected to defend them. In other words, exactly what MacLean is experiencing.

This is not being “attacked.” It is what college classrooms and scholarly conversation are all about.

Unfortunately, the real attacks on left-wing faculty (and yes, there have been ones on right-wing ones too) have provided MacLean’s defenders with a convenient word to use to blur the difference between legitimate, but forceful, scholarly criticism, and threats of violence or silencing.

Always Take the High Road

Conservative critics of higher education should take this to heart. When you whip people into a frenzy over the crazy things that a small number of faculty say on Twitter, or because of legitimate concerns about the treatment of a small number of conservative speakers, the whipped up folks are going to do things you wish they wouldn’t. And that’s going to lead to blowback.

As a libertarian academic who frequently speaks at public events on other campuses, I do have low-level concerns about my safety. And if I were a progressive academic, I’d have similar fears given the way some of them have been treated, especially by politicians. Calling the intellectual criticisms of her book a coordinated conspiracy heads MacLean into Alex Jones territory, but given the current climate, it shouldn’t surprise us that she and her supporters feel “under attack.”

But notice the result: a book that smears libertarian and conservative ideas on the basis of shoddy scholarship gets attention because the author claims she’s under attack when she is called out in careful detail by other scholars. The real attacks on left-leaning faculty enable her to claim victimhood by association while using guilt by association to blame the conservative and libertarian intellectuals who are criticizing her work.

Once we head down the road, whether caused by the left, right, or libertarians, of turning intellectual disagreements into threats of violence, or threats to employment, or anything of that sort, the social losses are huge. Indeed, once both threats to people’s safety and employment and sharp intellectual disagreement become “attacks,” we will lose our ability to recognize the moral and intellectual difference between the two, and our disgust at the threats will weaken. And to the degree that the left largely dominates the intellectual world, conservatives and libertarians will be the biggest losers when academia turns into Fight Club.

So what to do? First, call off the dogs. Conservatives and libertarians need to consistently take the high road, as many of the intellectuals have tried to do in response to MacLean’s book. The hard part is getting right-wing media, both traditional and social media, to do the same. Those of us who care about intellectual standards have to publicly call out our own when they whip up anti-intellectual and anti-higher education frenzies.

Second, implore our left-wing friends of integrity to do the same. The most important thing that can happen to end this arms race is for scholars of integrity on the left to call out people like MacLean, both for their shoddy scholarship and their hyperbolic use of the language of conspiracy and attack. A strongly critical review of her book by a historian or economist of the center or left would go a long way to addressing the specific concerns it raises and could set a necessary example for others.

In the meantime, those of us critical of MacLean will continue to document her errors and press publicly for a response. And we’ll do so with the most proper of scholarly etiquette. I implore those sympathetic to our cause to be on their best behavior on social media as well. She and her supporters need no more ammunition.

Steven Horwitz is the Schnatter Distinguished Professor of Free Enterprise in the Department of Economics at Ball State University, where he also is a Fellow at the John H. Schnatter Institute for Entrepreneurship and Free Enterprise. He is the author of Hayek’s Modern Family: Classical Liberalism and the Evolution of Social Institutions and is a Distinguished Fellow at the Foundation for Economic Education (FEE) and 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.

The White-Owned-Restaurant Outrage Is Wildly Misplaced – Article by Liz Wolfe

The White-Owned-Restaurant Outrage Is Wildly Misplaced – Article by Liz Wolfe

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Liz Wolfe
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The latest political correctness outcry is a series of “white-owned appropriative restaurants” in Portland. While there are legitimate grievances to be made against white people who mock other cultures and then use them to profit once they become trendy, tirades like this list don’t level the economic playing field. More often than not, they breed resentment as political-correctness fights tend to back people into their respective partisan corners.

I read all the articles listed on the first page of the list –I should educate myself about hardships other people face while I remain immune. I’ll give credit where it’s due: many of these articles center around the idea that systemic disadvantage creates poverty, and many people of color don’t have the same financial resources to open restaurants that their white counterparts have. It follows, then, that white people get to profit from rich cultural traditions while the people who have claim to that origin don’t. I see how that feels viscerally unfair.

But are white entrepreneurs really the culprits here, or is it a larger system of historic disadvantage that has created these differences in wealth? Which system should we rebel against?

Appropriating Tortillas and Hip-Hop

Portland’s Kooks Burritos food truck, one of the restaurants listed, recently closed their doors for good, presumably as a result of all the hate they’d been getting. In a profile by the Willamette Week, founders describe being entranced by the tortillas they had on a trip to Mexico. This inspired them to ask local ladies about the ingredients, but they would only reveal part of the recipe, not the techniques, leading the two Kooks founders to peek into windows of nearby restaurants attempting to learn the art of tortilla-making. Two white women spying on resistant Mexican cooks to open a trendy food truck sparked outrage.

There’s a tough balance between co-opting traditions and voluntarily sharing customs. Perhaps the owners of Kooks Burrito erred too far on the side of co-opting, as they attempted to steal recipes from locals instead of engaging in voluntary exchange. But demonizing them is yet another foolish battle that won’t right the wrongs of the past or teach fruitful lessons to white restaurant owners.

Cultural sharing isn’t something to be intrinsically discouraged. Appropriation, as a concept, often seems logically inconsistent. When an American university fraternity tried to throw a theme party with a play on the song “Bad and Boujee,” administrators objected, citing “cultural appropriation” as the problem. But which culture are we talking about? Which people are being subjugated and what is the true origin? “Latin, French, Marxist, Urban hip-hop?” suggested Catherine Rampell at The Washington Post. In other words, is any iteration apart from the true origin an offensive act?

I doubt it. When we wade down the slippery slope of condemning people for well-intentioned practices, we often create enemies and become a culture where people are brutally shamed for their missteps, never learning from their mistakes.

How does this work when practices like yoga come under fire? Is yoga a less heinous thing to take part in because the origin is often explained more thoroughly? Perhaps yoga classes in US-based ashrams should continue to exist, but what about my less-conscious local YMCA? And still, who should make these judgment calls?

Using these Opportunities for Good

There seems to be a lot of gray area, and I doubt attempts to exercise more control over the individual would create good outcomes. Generally speaking, let’s reserve use of authority and force for the direst situations in which people are directly harming one another.

A hardline reaction either way is misguided. The truth likely lies somewhere in the middle – marginalized groups have been historically disadvantaged, and that disadvantage often remains for many decades. But cultural appropriation isn’t necessarily bad, nor is it as easily defined, as social-justice advocates might hope. It’s through cultural sharing, in its many forms, that people are able to make a living, spread knowledge of a particular topic, and advance current practices.

If a white business owner is spreading popularity of Burmese food, for example, and creating more demand for it, could that be a good thing for hopeful Burmese immigrants intent on entering the industry?

I went to a white-owned Burmese restaurant in Thailand where the owners had pamphlets on current events – namely the ethnic cleansing that has gripped much of the country. Although my appetite was reduced, exposure to Burmese culture made me more invested in Burmese current events. Now, headlines stick out to me. I remind traveler friends that they should be conscious of where their tourism money goes, as much of it unintentionally ends up lining the pockets of corrupt government officials.

White ownership isn’t the problem in Portland. Instead, it’s a complex web of systemic disadvantage, fear of ignorance on the part of proprietors, and worries that hard-working immigrants will be shoved out of the market. Those are more than worth fixing, but filing this cleanly under the “cultural appropriation” label doesn’t give proper weight to the many sides of this important issue.

Let’s stop condemning the wrong practices.

Author’s Note: I reached out to the creators of the “white-owned restaurants” spreadsheet with several questions. They said, “We can answer questions off the record to further your own understanding, but we are uncomfortable providing a statement due to the news media’s tendency to offer racist counterpoints in the name of ‘fairness.’ Let us know if that is agreeable.”

Liz Wolfe

Liz Wolfe is managing editor of Young Voices. You can follow her on Twitter: @lizzywol.

 

This article was originally published on FEE.org 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.

The Evidence Weighs in Favor of Immigration – Article by Luis Pablo de la Horra

The Evidence Weighs in Favor of Immigration – Article by Luis Pablo de la Horra

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The New Renaissance HatLuis Pablo de la Horra
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In a previous article, I analyzed the economics of immigration from a theoretical perspective. I concluded that economic theory clearly supports immigration-friendly policies since they benefit all parties involved. In this article, I will examine the empirical evidence on the effects of immigration on host countries and immigrants themselves.

Effects on Employment, Wages, and Public Finances

High immigration rates are often associated with rises in unemployment. The logic behind this (flawed) reasoning is straightforward: if an economy can only absorb a fixed number of jobs and the labor force increases, the unemployment rate will inevitably rise. What’s wrong about this statement? Simple: the economy is not a zero-sum game.

In other words, the number of jobs available increases as the economy grows. After World War II, the US labor force increased dramatically due to immigration and the massive entry of women into the labor market. It moved from 60 million in 1950 to around 150 million workers in 2007. And yet, the unemployment rate in 2007 was as low as 4.6 percent, near full employment.

In a survey paper on the economic effects of immigration, published in 2011, Sari Pekkala Kerr and William R. Kerr concluded that the long-term impact of immigration on employment is negligible. In their own words,

The large majority of studies suggest that immigration does not exert significant effects on native labor market outcomes. Even large, sudden inflows of immigrants were not found to reduce native wages or employment significantly.

As suggested by the research conducted by Giovanni Peri, professor of Economics at UC Davis, immigration has positive effects on productivity since it expands the productive capacity of the economy, which in turn results in higher wages in the long run. Nonetheless, there are certain disagreements on how immigration affects native, low-skilled workers (mainly high school dropouts).

Different studies point at a wage decline between 0 (no effects at all) and 7 percent for this segment of population. Even when assuming the worst-case scenario of a 7 percent decline (which does not consider the investment in capital undertaken by companies to compensate for a decline in the capital-labor ratio), low-skilled immigration has net positive economic effects for host societies, allowing native workers to perform more productive jobs and increasing the specialization of the economy.

One of the most popular arguments against immigration is the issue of welfare benefits. Immigrants are believed to pose a burden on the host economy. Their net fiscal impact (defined as taxes paid by immigrants minus public services and benefits received) is thought to be overwhelmingly negative when compared with the fiscal impact of natives. Yet the evidence does not support this idea. As pointed out by Kerr and Kerr,

It is very clear that the net social impact of an immigrant over his or her lifetime depends substantially and in predictable ways on the immigrants’ age at arrival, education, reason for migration, and similar […] The estimated net fiscal impact of migrants also varies substantially across studies, but the overall magnitudes relative to the GDP remain modest […] The more credible analyses typically find small fiscal effects.

Therefore, there are no good reasons to impose tough restrictions on labor mobility in the name of fiscal sustainability.

The Place Premium: How to Reduce Poverty by Lowering Immigration Barriers

Wage differentials among countries can be explained by drawing on the concept of Place Premium, that is, the increase in earnings that a worker automatically experiences when moving to a high-productivity country. This increase is due to several factors: differences in capital stock, infrastructure, proximity to other high-productivity workers, etc.

The Place Premium of potential immigrants moving to the US has been estimated for a few countries. A Haitian worker that were to relocate to the US would see her PP-adjusted earnings automatically rise by 700% when compared to the same worker in Haiti performing an equivalent job (or a job that requires the same skills and education). Similarly, a worker from Guatemala or Nicaragua would more than triple her earnings, while a Filipino would increase her purchasing power by 3.5 times. In other words, relaxing barriers and letting more immigrants into higher-productivity countries seems to be one of the most effective ways to improve the life of millions of people worldwide.

All in all, the economic benefits of immigration seem obvious for both host countries and immigrants. The data shows that restrictive immigration policies have adverse effects on host economies and prevent would-be immigrants from increasing their income by migrating to higher-productivity countries. Thus, the path to take is clear: we should gradually reduce immigration barriers so that more and more people can take advantage of the benefits of capitalism.

Luis Pablo de la Horra is a Spanish finance graduate from Vlerick Business School.

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.