Utopia, you are standing in it!

In 1978 Robert Lucas and Thomas Sargent launched a famous attack on Keynes and Keynesian economics, which they viewed as having been discredited by the confluence of high inflation and high unemployment in the 1970s. They also expressed optimistism that an equilibrium approach to business-cycle modeling would succeed in replicating reasonably well the observed time-series variables relating to output and employment. In particular they posited that a model subjected to an unexpected monetary shock causing an immediate downturn from an equilibrium time path would be followed by a gradual reversion to that time path, thereby capturing the main stylized facts of historical business cycles. Their optimism was disappointed, because the model that Lucas had developed, based on an informational imperfection preventing agents from distinguishing immediately between real and nominal price changes, could not account for downturns because the informational imperfection assumed by Lucas could not account for the typical…

What’s socialism?

Is it the centrally planned economies of Cuba and North Korea? Or the kleptocracies of Zimbabwe and Venezuela?

How about the interventionist welfare states of Greece, Italy, and France? Or the redistribution-oriented Nordic nations?

Since socialism means different things to different people, the answers will be all over the map.

But there’s one constant. However it’s defined, it doesn’t work.

Joshua Muravchik, writing for the Wall Street Journal, shares the many and inevitable failures of socialism.

It’s hard to think of another idea that has been tried and failed as many times in as many ways or at a steeper price in human suffering. …Marx (1818-83)…called his vision “scientific socialism.” Inspired by the dream of proletarian revolution overthrowing capitalist immiseration, socialist parties sprouted across Europe. Yet instead of growing poorer, workers in industrialized countries saw improvement in their living standards…

CO2 is not pollution
In the end nature determines how much of the trace gas carbon dioxide is in the atmosphere, via the carbon cycle. Certain human activities may alter the numbers up or down temporarily. There’s vast expense, including lots of pipelines nobody wants, with no known finishing line in so-called ‘carbon capture’.
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Up to a fifth of emissions cuts from the Inflation Reduction Act are expected to come from carbon capture technologies, but there are major technical and political hurdles, says Climate Home News.

US president Joe Biden is expected to sign off a sweeping climate, energy and health care bill on Tuesday (16 August). It contains about $370 billion to foster clean energy development and combat climate change, constituting the largest federal climate investment in history.

Several studies project that its climate and energy provisions could enable the United States to reduce its…

Incentives matter.

Sometimes that can be explained with wonky discussions of marginal tax rates or welfare traps.

But that may not be the best approach when trying to convince someone with no aptitude for economics. So what’s the best way of introducing such concepts to, say, a Bernie Sanders supporter?

You can point to the economic chaos in places such as Greece and Venezuela and explain that Margaret Thatcher was right when she warned that socialists eventually run out of other people’s money.

But that’s probably not too effective because they’ll simply point to Sweden and Denmark and you’ll have a hard time educating them that those countries became successful when government was small and that they’ve been falling behind ever since big welfare states were imposed.

So perhaps we first need to help them understand very simple notions.

That’s why, when trying to introduce basic concepts, I’ll often…

Germans are paying the price for their Green-Left government’s maniacal fixation on heavily subsidised and hopelessly intermittent wind and solar. Already suffering Europe’s highest power prices, with prices still on the ascendant, German bureaucrats have been reduced to rationing energy of all descriptions at the micro level, in a way not seen since its postwar recovery. As winter approaches, Germans are being offered the opportunity to bunch up in exhibition halls when temperatures plummet, so they can collectively stay warm in a commonly heated space.

The writing was on the wall, even before Vlad Putin stormed Ukraine and began holding Europe to ransom with threats (feigned and ultimately realised) to slash Russian gas supplies to Europe.

2021 was the year when the inherent unreliability of wind and solar revealed how everything depends upon reliable and affordable power supplies. Europe’s months-long wind drought in the last half of 2021 made the…

Germans are paying the price for their Green-Left government’s maniacal fixation on heavily subsidised and hopelessly intermittent wind and solar. Already suffering Europe’s highest power prices, with prices still on the ascendant, German bureaucrats have been reduced to rationing energy of all descriptions at the micro level, in a way not seen since its postwar recovery. As winter approaches, Germans are being offered the opportunity to bunch up in exhibition halls when temperatures plummet, so they can collectively stay warm in a commonly heated space.

The writing was on the wall, even before Vlad Putin stormed Ukraine and began holding Europe to ransom with threats (feigned and ultimately realised) to slash Russian gas supplies to Europe.

2021 was the year when the inherent unreliability of wind and solar revealed how everything depends upon reliable and affordable power supplies. Europe’s months-long wind drought in the last half of 2021 made the…

The head of the French Republic, Napoleon, assumed the title “Emperor of the French” in 1804. Among others, one of the important figures attending the coronation was Pope Pius VII, probably fearing that Napoleon planned to conquer the Papal States.

Pope Pius VII was aware that Napoleon symbolically linked his imperial coronation with the imperial coronation of Charlemagne and would most likely have caught the similarity between Napoleon’s title and Emperor of the Romans, the title used by Franz II and all Holy Roman emperors before him. Through his presence at the ceremony, Pius VII symbolically approved of the transfer of imperial power (translatio imperii) from the Romans (and thus the Franks and Germans) to the French.

Napoleon’s coronation received a mixed reaction in the Holy Roman Empire. Although a return to monarchy in France was welcomed (though unfortunate in so far that the monarch was Napoleon), the imperial title…

With the possible exception of a few extreme environmentalists, everyone agrees that robust long-run growth is a key to a better society.

An unprecedented jump in growth, for instance, is what enabled the western world to escape poverty, resulting in the famous “hockey stick” of modern prosperity.

Maintaining growth is an ongoing challenge for developed countries, to be sure, and it’s also vitally important to help developing nations grow and prosper.

Which is why policymakers should focus on the policies that generate good outcomes.

Libek, a think tank in Serbia, has released a study on this topic. They start by pointing out that we now have some good measures of economic liberty in various nations.

…the Economic Freedom in the World Index in 1996 by the Fraser Institute…was the first methodological tool that measured intrusion in functioning of the market process by government entities, either directly

Back in 2016, I created a 2×2 matrix to illustrate the difference between redistributionism (tax Person A and give to Person B) and state planning (politicians and bureaucrats trying to steer the economy, either through direct ownership or industrial policy).

The main point of that column was to show that countries should try to be in the top-left section, where there is less redistribution and less government control.

But I also wanted to help people understand that redistributionism and socialism are not the same thing.

For instance, Sweden (in the bottom-left box) is a capitalist economy with a big welfare state, whereas China (in the top-right box) doesn’t have much redistribution but government has substantial control over economic activity.

From an American perspective, the good news is that the U.S. currently is in the top-left box.

The bad news is that President Biden wants the country in the bottom-left…