HT: deirdremccloskey via cafehayek
Deirdre McCloskey: inequality is an ugly word – it frightens
20 Aug 2014 Leave a comment
in applied welfare economics, development economics, growth disasters, growth miracles, history of economic thought, income redistribution, liberalism Tags: Deirdre McCloskey, poverty versus inequality, The Great Escape The Age of Enlightenment, The Great Fact
HT: deirdremccloskey via cafehayek
The Death of Statistical Significance: Deirdre McCloskey
17 Aug 2014 Leave a comment
in econometerics Tags: Deirdre McCloskey, empirical testing, methodology of econometrics, methodology of economics, the cult of statistical significance
Deirdre McCloskey on Adam Smith
05 Aug 2014 Leave a comment
in Adam Smith, history of economic thought Tags: Deirdre McCloskey
Market failure here, market failure there, market failure everywhere
28 Jun 2014 Leave a comment
in applied price theory, applied welfare economics, comparative institutional analysis Tags: Deirdre McCloskey, the Nirvana fallacy
Deirdre McCloskey on the minimum wage
20 Jun 2014 Leave a comment
in labour economics, minimum wage Tags: Deirdre McCloskey, minimum wage
“Jobs” are deals between workers and employers, and so “creating” them out of unwilling parties is impossible. The state, though, can outlaw deals, and has.
So: eliminate the minimum wage for people younger than 25. The resulting boom in jobs for young people will amaze.
Maybe it will inspire voters to get the state out of the job-outlawing business. Probably not, so sure are we that the state “protects” by stopping deals between willing parties.
The great leap backward
17 Jun 2014 Leave a comment
in comparative institutional analysis, development economics, environmental economics, growth disasters, population economics Tags: Deirdre McCloskey
The importation of socialism into the Third World, even in the relatively non-violent form of Congress-Party Fabian-Gandhism, unintentionally stifled growth, enriched large industrialists, and kept the people poor. Malthusian theories hatched in the West were put into practice by India and especially China, resulting in millions of missing girls. The capitalist-sponsored Green Revolution of dwarf hybrids was opposed by green politicians the world around, but has made places like India self-sufficient in grains.
State power in many parts of sub-Saharan Africa has been used to tax the majority of farmers in aid of the president’s cousins and a minority of urban bureaucrats. State power in many parts of Latin America has prevented land reform and sponsored disappearances. State ownership of oil in Nigeria and Mexico and Iraq was used to support the party in power, benefiting the people not at all. Arab men have been kept poor, not bettered, by using state power to deny education and driver’s licenses to Arab women.
The seizure of governments by the clergy has corrupted religions and ruined economies. The seizure of governments by the military has corrupted armies and ruined economies.
What the experiments of the 20th century told me
14 Jun 2014 Leave a comment
in applied price theory, comparative institutional analysis, development economics, economic history Tags: Deirdre McCloskey, The Great Enrichment, The Great Fact
It would have been hard to know the wisdom of Friedrich Hayek or Milton Friedman or Matt Ridley or Deirdre McCloskey in August of 1914, before the experiments in large government were well begun.
But anyone who after the 20th century still thinks that thoroughgoing socialism, nationalism, imperialism, mobilization, central planning, regulation, zoning, price controls, tax policy, labour unions, business cartels, government spending, intrusive policing, adventurism in foreign policy, faith in entangling religion and politics, or most of the other thoroughgoing 19th-century proposals for governmental action are still neat, harmless ideas for improving our lives is not paying attention.
The great enrichment – Deirdre McCloskey’s 2013 John Bonython lecture on ABC Radio
06 Jun 2014 1 Comment
in development economics, economic history, growth miracles, history of economic thought Tags: Deirdre McCloskey, The Great Enrichment, The Great Escape, The Great Fact, The Industrial Revolution
Capitalism has raised living standards worldwide by a thousand fold. Societies that respect innovation and entrepreneurship can expect more of the same.
In the space of just a couple of hundred years real incomes and living standards have risen dramatically. From peasantry to prosperity – how did it happen ?
According to McCloskey in her 2013 John Bonython lecture presented by the Centre for Independent Studies, it was ideological change, rather than saving or exploitation, that created this prosperous modern world.
McCloskey proclaims “it’s OK to be in business” and asks those critical of capitalism to re-think their opposition.
Business and enterprise, she suggests, is altruistic, cooperative and the best way to lift living standards in developing and emerging economies.
In a marvellous speech in India on the origins of economic freedom (and its subsequent fruits), Deirdre McCloskey aptly crystallizes the deeper implications of her work on bourgeois virtues and bourgeois dignity:
The leading Bollywood films changed their heroes from the 1950s to the 1980s from bureaucrats to businesspeople, and their villains from factory owners to policemen, in parallel with a similar shift in the ratio of praise for market-tested improvement and supply in the editorial pages of The Times of India…
Did the change from hatred to admiration of market-tested improvement and supply make possible the Singh Reforms after 1991?
Without some change in ideology Singh would not in a democracy have been able to liberalize the Indian economy…
…After 1991 and Singh much of the culture didn’t change, and probably won’t change much in future.
Economic growth does not need to make people European.
Unlike the British, Indians in 2030 will probably still give offerings to Lakshmi and the son of Gauri, as they did in 1947 and 1991.
Unlike the Germans, they will still play cricket, rather well.
So it’s not deep “culture.” It’s sociology, rhetoric, ethics, how people talk about each other.
Deirdre McCloskey on why poverty matters more than inequality (BBC Radio interview)
30 May 2014 2 Comments
in applied price theory, applied welfare economics, development economics, growth miracles Tags: Deirdre McCloskey, Piketty, The Great Enrichment, The Great Escape, The Great Fact
In place of capitalism, she talks of a system of ‘market-tested innovation and supply’:
You have to ask what the source of the inequality is.
If the source is stealing from poor people, I’m against it.
But if the source is, you got there first with an innovation that everyone wants to buy, so you get paid some crazy sum, you ought to be paid so much, don’t you think?
There is noting to be gained by focusing on inequality.
McCloskey’s characteristically extravagant self-description:
She asks that compared to all the envy driven policies, what has helped the poor more than increasing the size of pie?
McCloskey argued that:
- Equality is not an ethically sensible purpose.
- Changes in inequality was made an issue by the intellectuals, not by the working class.
- Absolute poverty is what matters and can be solved.
- Inequality is a fool’s errand.
- Who are you going to trust to fix a problem is the key?
- You must look at the actual ability of government to do various things.
- predicting the future of human affairs is a deeply foolish project.
Why Does 1% of History Have 99% of the Wealth? | Learn Liberty – YouTube
04 May 2014 Leave a comment
in constitutional political economy, development economics, entrepreneurship, liberalism, market efficiency, technological progress Tags: Deirdre McCloskey, industrial revolution, Rise of the Western World, rule of law, The Bourgeois Virtues, The Great Fact
Throughout the history of the world, the average person on earth has been extremely poor: subsisting on the modern equivalent of $3 per day.
This was true until 1800, at which point average wages—and standards of living—began to rise dramatically.
Prof. Deirdre McCloskey explains how this tremendous increase in wealth came about.
In the past 30 years alone, the number of people in the world living on less than $3 per day has been halved.
The cause of the economic growth we have witnessed in the past 200 years may surprise you.
It’s not exploitation, or investment. Innovation—new ideas, new inventions, materials, machinery, organizational structures—has fueled this economic boom.
Prof. McCloskey explains how changes in Holland and England in the 1600s and 1700s opened the door for innovation to take off—starting the growth that continues to benefit us today.
via Why Does 1% of History Have 99% of the Wealth? | Learn Liberty – YouTube.
If you are so smart, why aren’t you rich? MITI version
14 Mar 2014 4 Comments
in entrepreneurship, human capital, Public Choice, Wall Street Tags: Deirdre McCloskey, efficient markets, MITI, picking winners, Wall Street, Wolf of Wall Street
If you are so smart, why aren’t you rich? This is the American question – asked of MIT’s Paul Cootner by a money market manager in the 1960s.
Why do investment advisors sell and often give away their sage advice? If their insights were any good, they could trade on the share market before others caught on and make a killing!
Deirdre McCloskey wrote a book about the limits of economic expertise. For a summary, see http://www.deirdremccloskey.com/docs/pdf/Article_168.pdf.
I will give a personal example based on the skills of bureaucracies in picking winners. The test of my hypothesis is based on the transferability of human capital across jobs.
My graduate school professors in Japan included many retired bureaucrats from the Ministry of Finance and MITI. These agencies were heralded by Joe Stiglitz and others for picking winners and guiding Japanese companies to choose the right technologies and what to export.
The skills that my graduate school professors learned at picking winners over their careers with the Ministry of Finance and MITI in the high-growth years in the 1970s would now be available to them in their retirements to trade on their own account.
My graduate school professors should quickly become very rich after retiring because of the skills they learned in picking winners while at the Ministry of Finance and MITI, which should cross over into their private share portfolios. The rich lists world-wide should be full of retired industry and finance ministry bureaucrats.
Instead, my graduate school professors took the train and bus to work and their families lived off their salaries in standard sized Japanese government apartments. All looked forward to their annual bonus of 5.15 months salary.
If governments are any good at picking winners, people should be willing to pay big time to get jobs at ministries of finance and ministries of international trade and industry to get access to their unique and highly secret skills they learn therein on how to pick winners. I am still waiting for that tell-all book by an insider on these skills. Why is there no Picking Winners for Dummies on Amazon kindle as yet?
P.S. McCloskey argued that the advising industry lives off 19th century case law on directors’ and trustees’ duties. If you take advice – from an accountant, a lawyer or an economist – and the business or investment still fails, it can’t be your fault. You took advice.
P.P.S. Cootner’s reply was “If you’re so rich, why aren’t you smart?” The answer to this was Wall Street investment brokers didn’t have to be smart to get rich; they can make money off fees and brokerage commissions even when their investment advice stank. Didn’t you watch The Wolf of Wall Street?
Utopia, you are standing in it! 
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