Applied welfare economics was never value free, but applied price theory is @TimothyTTaylor

The first words uttered in my first lecture in applied welfare economics by Bob Rutherford were ‘this course starts with an explicit political position – that of liberalism’. I never forgot that.

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Source: CONVERSABLE ECONOMIST: Crossing the Ravine from Economic Theory to Policy Advice.

This leads us to Robert and Zeckhauser’s taxonomy of disagreement:

Positive disagreements can be over questions of:
1. Scope: what elements of the world one is trying to understand?
2. Model: what mechanisms explain the behaviour of the world?
3. Estimate: what estimates of the model’s parameters are thought to obtain in particular contexts?

Values disagreements can be over questions of:
1. Standing: who counts?
2. Criteria: what counts?
3. Weights: how much different individuals and criteria count?

Any positive analysis tends to include elements of scope, model, and estimation, though often these elements intertwine; they frequently feature in debates in an implicit or undifferentiated manner. Likewise, normative analysis will also include elements of standing, criteria, and weights, whether or not these distinctions are recognised.

The origin of political disagreement is a broad church indeed in a liberal democracy. Those you disagree with are not evil, they just disagree with you. As Karl Popper observed:

There are many difficulties impeding the rapid spread of reasonableness. One of the main difficulties is that it always takes two to make a discussion reasonable. Each of the parties must be ready to learn from the other.

@MaxRashbrooke The top 1% in New Zealand are lazy and incompetent as a ruling class

The top 1% in New Zealand really have been dropping the class war ball for at least a generation.

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Source: The World Top Incomes Database.

Not only have the New Zealand top 1% been pretty miserable at increasing their share of incomes, hardly any change since 1990 and not much before that, the top 1% allowed inequality in both consumption and disposable income to actually fall since 1990 as shown by Treasury analysis published today.

Joan Robinson was on to this in the 1940s when she said the battle cry of Marxists would have to change from the 1848 version “rise up ye workers, rise up for you have nothing to lose but your chains” to “rise up ye workers, rise up for you have nothing to lose but the prospect of a suburban home and a motorcar”.

Today that battle cry of the Marxist revolution would have to be “rise up ye workers rise up for you have nothing to lose but your iPhone and your air points”. As Joan Robinson observed in the 1940s, that’s not much of a basis for a revolutionary movement.

Joan Robinson on capitalist exploitation – the horror, the horror

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“Inflation is always and everywhere a monetary phenomenon”

Joan Robinson thought German hyperinflation was not caused by monetary policy!!

Matt Rognlie

Almost, but not quite.

Back in the days when dinosaurs roamed the earth, and Cambridge economists kept guard at the Temple of Keynes, Milton Friedman’s focus on inflation as a monetary phenomenon was a revelation—and an excellent one. Next to Joan Robinson’s surreal claims that printing money was not responsible for the German hyperinflation, Friedman’s version of monetary economics provided a very healthy dose of sanity. And as central banks across the world learned from the mistakes of the 70s and brought inflation under control, it became clear that the monetary authority indeed had the power to contain the price level via control of the money supply.

But it’s important to know what this account leaves out: how, exactly, do prices adjust? And over what length of time does this happen?

The modern view, backed up by impressive (though not entirely conclusive) empirical evidence, is that most prices are…

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The failures of progressive politics

Limiting ourselves to democratically elected governments, and there are many of these even in the under-developed countries, progressive ideas seem to fail, and fail again at the ballot box right around the globe as you concede the strong right-wing bias of many governments across the globe.

There was one left-wing federal government in Australia in the last 60 years. That was for three years between 1972 and 1975, and it lost in a landslide.  the Whitlam government got in buy a few seats  in 1972by beating tired and smelly government that had held office for 23 years

This inability of progressive politics get anywhere is important because every set of ideas needs effective critics to keep it on its toes and stop it from slouching into error and special interest capture.

The Right needs a vibrant Left to keep the Right fit, trim and down to its fighting weight so as to be able to thrash the Left once again at the next election. That is the function of left-wing governments:  mind the shop  while the right-wing parties are fed and rested  and rejuvenated.

Prior to the 1990s, all it took to see progressive ideas off the political and economic stage in a country was a visit or two by Milton Friedman, if some are to be believed. I do not believe that political transformations are as easy as this.

However, some still want to maintain the rage over, for example, Friedman’s April 1975 trip to Australia for 18 days leading to a paradigm shift to neo-liberalism and Hayden’s supposedly monetarist budget shortly after if Alex Millmow is to be believed. Apparently, the spirited, witty Joan Robinson’s visit the same month and her own Monday conference program did not do the trick as an anti-biotic and vaccine.

Progressives will have no role in future political transformations because if you scratch a progressive you will find a left wing populist.

A left-wing populist is too busy telling you who to fear and who to blame to put up policies that are actually robust enough to work and to have worked in the past in a society where people are not perfect in their motivations, they do not have perfect knowledge in a changing world, and there is no offsetting behaviour and unintended consequences when these policies are put in practice.

Why call my blog Utopia – you are standing in it?

Welcome to my blog.

My blog reflects where I came from and how I think the world works for better and for worse.

Yes, my background is as a trained economist, but this blog’s title is more to do with how the over-weaning conceit of youth was replaced by an increasingly unreliable memory, a bad back and the odd dose of wisdom.

My mum and dad grew up between the two world wars. Their and my upbringing seem to be light years apart in terms of quality of life.

Longer and healthier life expectancies are obvious. Less obvious are the day to day risks of crippling diseases.

My brother told me a story about how my father, who was a doctor, used to give my older brothers and sisters  the once-over with his eye each morning at breakfast looking for initial signs of polio and the other endemic childhood illnesses of the 1950s. These days, you show your age if you know of these endemic diseases. I was born a few years after mass immunisations of babies started. Was it just lucky me?

I am also old enough to remember when going to an airport was exciting because you were going somewhere. Devonport (in Tasmania) to Melbourne was a big trip when I was a kid. A luxury back then. Now airports are a boring wait that we must endure.

My sister traveled the world a lot. She started in about 1973 when an airfare from Sydney to London was $2,000. That was maybe a year’s income back then for her. For some reason, I kept note of that price. That airfare never increased despite 40 years of inflation.

I first visited Asia in 1993. Lived in Japan from 1995 to 1997.

Although of average height for an Australian, I was tall in Asia back then. Looking over the top of the crowd is really great. There were so few obese Japanese of any age that it really was a cause for comment when you saw one.

No more, no longer. Last time I visited Hong Kong, I was looking up at the young Chinese men serving behind the counters at McDonalds.  Each generation is head and shoulders taller than their parents in Asia.

When I first visited my parents-in-law in the Philippines, that part of Leyte had no sealed roads and no phones. The next time I visited, the road was being sealed and mobile reception was better if you had an arial on the roof. After a five year gap in visiting, not only was mobile reception good, there was cable TV if you wanted it. When I visited in 2012, there was wireless internet if you had outside arial. Last Christmas, we hot spotted off my sister-in-law’s mobile.

These revolutionary improvements in my life in a rich country and in lives in developing countries must have a cause.

This blog will champion the spread of capitalism and the rule of law as the cause of the flourishing of humanity in the 20th century and beyond.

I call this a utopia because it is the heaven on earth that led so many to fall for the siren call of socialism and progressive politics. They did not notice that they were already in paradise.

Joan Robinson noted in her 1942 book An Essay on Marxism that when the Communist Manifesto was published in 1848, its battle cry, which would have had some currency, was:

‘Rise up ye workers, rise up, for you have nothing to lose but your chains.’

The industrial revolution was still in its infancy in 1848.

Alas, 90 years later, Joan Robinson suggested that this battle cry at the barricades would have to be amended to:

‘Rise up ye workers, rise up, for you have nothing to lose but your suburban home and your motor car.’

This optimism was in the middle of a world war and after the Great Depression. (Joan Robinson was one of the first writers to take Marx seriously as an economist).

These days the battle tweet of the progressive Left would have to be:

‘Rise up ye workers, rise up, for you have nothing to lose but your iPad and your air miles’.

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