Category Archives: links to my essays

My review of Pascal Boyer

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I write,

Boyer writes,

… the economy or society as a whole is construed as a gigantic collective action, to which everyone contributes in one way or other, and from which they may receive rewards.
… humans do not generally believe that any individual’s contribution could possibly be hundreds or thousands of times greater than anyone else’s.

This reinforces the instinct that economic inequality must be derived from power rather than from merit.

I found Minds Make Societies to be highly valuable, and I am disappointed that it seems to have been mostly overlooked. Don’t overlook my review.

The Junger trade-off

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My latest essay begins,

Are the circumstances that promote material well-being the opposite of those that promote tight social connection? My take-away from listening to this fascinating discussion between Russ Roberts and Sebastian Junger is that such a trade-off does exist.

It seems that social connection is at its highest in small-scale groups facing hardship. That is the opposite of the recipe for prosperity.

Klassic: the two systems people work under

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A reader suggested an old blog post on two systems.

In the business system, your status comes from market acceptance. If the market likes your offering, you have high status. To hold onto that status, you must deal with competition. Ultimately, you have to accept the choices that consumers make.

In the other system, which applies to permanent government employees, teachers, and professors, status comes from credentials. You automatically get more money if you have a higher degree. You can acquire tenure, which insulates you from job loss. (During the recent recession, compare the rate of job loss among people in system A with that in system B.) Finally, you operate on the basis of authority. In government, you can force people to obey your edicts. In education, you can force students to take your courses–or, better yet, to pay your salary even though hardly any students enroll in your courses.

There is more at the link, and I probably should have written even more.

Mariana Mazzucato

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I found myself frustrated by her conversation with Russ Roberts. She repeatedly points out that government has funded successful innovations. The implication, in her view, is that we should pay higher taxes in order to fund more innovation.

But the question is whether the government or the private sector is structurally more suited to spending money on innovation. It seems to me that Russ could not get Ms. Mazzucato to discuss the issue at that level. Trading anecdotes back and forth about particular private-sector and public-sector successes and failures is not constructive. I gave up listening well before the podcast ended.

I like to break down innovation into experimentation, evaluation, and evolution. I think that government has a disadvantage at all three.

Any one organization is limited in the number of experiments on which it can focus. When the government was focused on landing on the moon, it succeeded. But it is hard for any one organization, not just government, to focus on a lot of experiments at once.

When it comes to evaluating experiments, everybody is overly optimistic about their own projects. But in the private sector, the subjective evaluation of the project champions is subordinate to the third-party evaluation of consumers. In the public sector, the legislators and bureaucrats who champion a project also are doing the evaluation.

Finally, when it comes to evolution, government has no natural mechanism to shut down unworthy projects. When a private-sector project is not producing value, it loses money and gets terminated.

Twenty years ago, I wrote an essay in which I explained why, contrary to what some pundits were arguing, middle managers should not be encouraged to take more risks inside corporations. In essence, I made a “skin in the game” argument. That argument applies very strongly to the case of government-funded risk-taking, in which the cost of failure is not borne by the decision-makers.

Thoughts on temperament

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I put them into this essay.

we treat people as having persistent inclinations to behave in certain ways. That is, we treat people as having temperaments. In everyday life, we operate with a theory of temperament.

I make no claim to expertise in this area. The essay has an IDW flavor to it. That is, to me, it seems reasonable and sensible, yet it might require a “trigger warning” of some sort.

Klassic: a meditation on innovation

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This essay is from 2001. More recently, a lot of people have complained about a slowdown in economic progress. Back then, I wrote,

I think that the adoption and filtering bottlenecks will start to have a visible effect on the rate of technological progress within ten years. Perhaps we will look back in ten years and say that the deceleration of change had already begun at the time that I wrote my essays.

What I mean by the adoption and filtering bottlenecks is that human limitations are an important factor. If we are confused and confounded by new technology, then innovation will have to slow down to allow us to catch up.

Kling on the financial crisis of 2008

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For the Concise Encylopedia of Economics. An excerpt:

There can be no single, definitive narrative of the crisis. This entry can cover only a small subset of the issues raised by the episode.

Metaphorically, we may think of the crisis as a fire. It started in the housing market, spread to the sub-prime mortgage market, then engulfed the entire mortgage securities market and, finally, swept through the inter-bank lending market and the market for asset-backed commercial paper.

It is now a decade since I wrote Not What They Had in Mind, which in my opinion still holds up.

In the encyclopedia entry, space was limited, and I had to limit my coverage. I decided that I had essentially no room to cover the many narratives of the crisis that differ from my own.

Klassic: three libertarian priorities

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In January of 2007, I wrote,

The goals of the free-market agenda should be:

1. Increase the proportion of children who are schooled outside of the public school system.
2. Increase the proportion of health care spending that is paid for directly by consumers.
3. Limit the fraction of people’s lives where they collect Social Security.

. . .If I wanted to create an industry with poor performance characteristics, I would set it up like the public school system. I would create a monopoly and set up an institutional structure that entrenches producers while marginalizing consumers. I would locate decision-making power at an ever-increasing distance from those affected by the decisions.

If I were writing this essay today, I would emphasize the ideological damage inflicted by government schools, not just the inherent inefficiency. But I think that the main point of the essay holds up, namely that the Republicans have ducked the big three elements of statist economic policy.

Klassic: Masonomics

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In 2007, I wrote,

Masonomics says, “Markets fail. Use markets.”

. . .The argument between Chicago and MIT seems to be over whether perfect markets are a “good approximation” or a “bad approximation” to reality. Masonomics goes along with the MIT view that perfect markets are a bad approximation to reality. But we do not look to government as a “solution” to imperfect markets.

Two years later, I wrote,

Tyler argued that politics is about determining what sorts of groups have high status in a society. I think this can relate to the idea that people are motivated to feel good about themselves and to believe that others think highly of them. Think of political identity as like religious identity or musical identity. Tyler pointed out that it’s pretty easy to predict what music will be on the iPod of an upper middle class sophomore girl at Brown will like certain music, and it is pretty easy to predict the musical tastes of a 25-year-old male gas station mechanic in Grand Rapids, Michigan, and those are quite different. You might not get as high an R-square predicting political affiliations, but you could still do pretty well.

I am thinking that at the margin this blog may be better if I include more posts that point readers to older essays of mine. Hence the Klassic.