The Butler symposium, "Capitalism and the Good Society," is up at EconTalk. Epstein, Munger, Sidelsky circus, with Russ Roberts as ringmaster.
It's really LOOONG, of course, but the individual parts are interesting, and different. And the HD version of it is really quite beautiful filmed, as you would expect from genius-boy John Papola doing the production.
In which I tell:
1. The Pig story
2. The Shopping Cart story
3. The Unicorn story
4. The Bleeding story
So, story time! (And ya gotta love Skidelsky's sox...)
It's really LOOONG, of course, but the individual parts are interesting, and different. And the HD version of it is really quite beautiful filmed, as you would expect from genius-boy John Papola doing the production.
In which I tell:
1. The Pig story
2. The Shopping Cart story
3. The Unicorn story
4. The Bleeding story
So, story time! (And ya gotta love Skidelsky's sox...)
12 comments:
Like!
What?!? No farmer's daughter story??
Cancel my subscription!
I'm surprised that Richard Epstein said that banks have to be regulated because the market can't solve the problem of bank runs.
Bank runs have one, and only one, cause, and that is a shortage of scrip. And the shortage of scrip has one, and only one, cause - laws that restrict the issuance of scrip.
We fear that free banks could be insolvent, so we created regulations that remove all natural mitigations to leverage and actually increase the danger of insolvency. Then, we make solvent banks illiquid, to boot.
It's disappointing to me to see market defenders accepting all of this as necessary.
Skidelsky offers prescriptions which are logically impossible to dispute. Too often he says something like "we need to do x so that prosperity returns", which suggests that to disagree with x is to disagree with the return of prosperity! The word "regulation" serves this magical purpose too. We need to regulate in order to solve this problem. What? You're against solving problems?!
It gets tiresome after a while. He must be truly baffled as to why anyone would ever disagree with him.
Mike's point about substituting the name of actual-politicans-you-know for the term "the state" seemed to fly over his head, or maybe just bore him. It shatters rather nicely the notion of the immaculate "state" which Skidelsky often invokes. We have imperfect information, therefore "the state" (the holder of perfect information) needs to step in and wave its magic wand. If only it were that simple.
Mike,
Listened to that podcast on a 5 hour drive yesterday... you had me both laughing and applauding in the car (by myself, I might add).
While your co-panelists were mired in specifics, I appreciated your 30,000ft view - and of course the stories.
Also, I will unashamedly pass of your stories as my own, at least while talking with those outside the field, or with Keynesians who obviously have never actually listened to you speak.
I'm a grad student going after my MS in economics, and debating whether to go the full monty for a Ph.D... it's good to know there are those in the field such as yourself and Russ that only take the math at face value, and not expect to solve every social ill with an equality or optimization function.
Great stuff. I was a little surprised that Lord Skidelsky, as smart as he is, completely missed the point of your analogy.
If you had known how Skidelsky would appropriate your story, you could have used "leeches" instead of "cutting." That seems more appropriate, regardless...
Regarding Mike's The Right Kind of Nothing which led to The Shopping Cart Story:
There was a beat policeman in the parking lot of a store, implying that there may be a lot of beat policemen in Germany, perhaps a lot more than we have in the US. That is a LOT of “something.”
The policeman doing “nothing” in this instance (i.e. not arresting you) is not at all remarkable once he understood that you were trying to help the woman. He “could have” arrested you, but then he almost certainly would have gotten in trouble with his supervisor for making an unnecessary and downright stupid arrest.
This story is not instructive about government over- or underreach because it’s too simple and obvious. Government doesn’t often do the wrong kind of something or nothing when the issues are simple and obvious. On the contrary, the government – and the private sector and even individuals – are more likely to get into trouble when the issues are complex and the solutions are not obvious or perfect. And to make a reference to your pig analogy, there is even more potential for trouble when all the possible solutions have different shades of ugly.
Worst of all, the policeman did the wrong kind of something when he put on a false show for the woman. I understand that this makes the story "cute and funny," but if the policeman is a metaphor for government, the government should not lie to the public. The public can handle the truth, just like the woman in this story could have handled the truth. Indeed, the woman probably would have felt better if she had been told the man was trying to help her rather than commit a crime.
The Shopping Cart story, part two:
When the policeman says he's got a nephew at Duke University, Mike thinks "Thank God!" If the policeman is a metaphor for the government we can interpret this to mean that Mike believes he escaped abuse from the government only by a lucky circumstance. This also implies that Mike believes government is intrinsically corrupt and inconsistent. Don't get me wrong - there are plenty of reasons to be cynical about government (and private corporations, for that matter). But if the purpose of this story is to demonstrate the "right" kind of nothing, the "right" kind of government action, then this dash of cynicism muddles the message. If the right kind of nothing is based on luck and who you happen to be, then it's not the right kind of nothing after all. Quite the opposite, in fact. (yes, yes, I know, the bit about a nephew at Duke adds yet another "cute and funny" touch to the story and here I am spoiling the party with cold, humorless logic and analysis)
Actually, the story doesn't even demonstrate the right kind of nothing. The mere absence of a ridiculous arrest is not "nothing." Even the police in authoritarian countries wouldn't waste time arresting people for such non-crimes, let alone the police in Western democracies.
There was a lot more "something" in this story than "nothing." It is something to have a beat policeman keeping watch over a parking lot. Germany is not known for its high crime rate, and I'm sure Mike wasn't shopping in a dangerous ghetto neighborhood, and yet there is a policeman on the beat nearby. So right off the bat that's a lot of something. When the woman screamed, the policeman also did something when he ran over to intercede and investigate. Not arresting Mike was not nothing, it was a decision, an action, based on an assessment of the facts. In other words, it was the right kind of something.
Truth be told, Mike's the only person in this story who did the wrong kind of something. He may not speak or understand German, but when a woman dodges to the left and then to the right that's a pretty clear message in universal body language that she didn't want Mike to take her cart. I'm sure she didn't have a very pleasant expression on her face, either. So is this story really a metaphor for how economists often miss all the obvious stuff as they myopically focus on arcane mathematical models that have nothing to do with the real world? :-)
William Bruce said, "If you had known how Skidelsky would appropriate your story, you could have used "leeches" instead of "cutting.""
First, Skidelsky didn't "appropriate" the story; he responded to it. In a panel discussion that's what panelists are SUPPOSED to do. Bruce, because you don't agree with his views you would prefer that he would just keep his mouth shut?
The substance of Skidelsky's response would not be any different if Mike had used leeches. Skidelsky was not making a semantic argument. Whether cutting or leeches or some other word is used, the metaphor refers to a general bleeding or weakening of the economy. Taxes and debt take something out of the economy and so does severe recession, high and chronic unemployment and austerity. Our economy is based on massive and constant consumerism. Maybe it's time we think about some of our fundamental premises? Would Mike say that an economy based on massive and constant consumerism is an ugly pig, but the least ugly of all the other pigs? The "winners" enjoy the "good life," and the losers and loafers seek assistance from charities? Is massive and constant consumerism the evolutionary pinnacle of human economic development, just as Fukuyama said that liberal democracies are the "end of history"?
If that's the case, then all I've got to say is:
Is that all there is, is that all there is?
If that's all there is my friends, then let's keep dancing
Let's break out the booze and have a ball
If that's all there is
Mike - I listened to the entire program yesterday. I really liked it. I actually thought Skidelsky made an interesting point about redistribution and opportunity. However, I can not think of a practice of redistribution which is tied to an outcome of raising opportunity. It seems to be aimed at relieving envy - which was to your point. Excellent work by all involved. Thanks!
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