Alchian and Allen on the irrelevance of economists and economic principles to progress
24 Jun 2014 Leave a comment
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.
P.T. Bauer on development aid as a precondition to development in the Third World
14 Jun 2014 Leave a comment
in development economics, growth miracles, P.T. Bauer Tags: development aid, P.T. Bauer, The Great Enrichment, The Great Fact
Foreign aid is clearly not a necessary condition of economic development. This fact is obvious from the history of the developed countries, all of which began poor and have invariably progressed without government-to-government aid.
It is clear also from the history of many underdeveloped countries — Hong Kong, Japan, Malaya — which have advanced in recent decades without foreign aid.
In Praise of Cheap Labor | Paul Krugman (1997)
09 Jun 2014 Leave a comment
in development economics, growth miracles, international economics, labour economics, labour supply Tags: Paul Krugman, Sweatshop labour, The Great Enrichment, The Great Fact
The lofty moral tone of the opponents of globalization is possible only because they have chosen not to think their position through.
While fat-cat capitalists might benefit from globalization, the biggest beneficiaries are, yes, Third World workers.
After all, global poverty is not something recently invented for the benefit of multinational corporations…
wherever the new export industries have grown, there has been measurable improvement in the lives of ordinary people.
Partly this is because a growing industry must offer a somewhat higher wage than workers could get elsewhere in order to get them to move.
More importantly, however, the growth of manufacturing–and of the penumbra of other jobs that the new export sector creates–has a ripple effect throughout the economy. The pressure on the land becomes less intense, so rural wages rise; the pool of unemployed urban dwellers always anxious for work shrinks, so factories start to compete with each other for workers, and urban wages also begin to rise.
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.
The Great Enrichment – Kids react to old computers version
04 Jun 2014 Leave a comment
in technological progress Tags: The Great Enrichment, The Great Fact
Piketty: A Wealth of Misconceptions by Don Boudreaux
01 Jun 2014 2 Comments
in applied price theory, applied welfare economics, economic growth, entrepreneurship, human capital, labour economics, labour supply Tags: inequality and poverty, Piketty, seen and unseen, The Great Enrichment, The Great Fact
Piketty’s method of doing economics involves frequent grand proclamations about "social justice" and economic "evolutions," but he offers no analyses of the dynamics of individual decision-making, often referred to as "microeconomics," that should be central to the issues he raises…
Revealingly, Piketty writes of income and wealth as being claimed or "distributed," never as being earned or produced. The resulting statistics are too aggregated—too big-picture—to reveal what is happening to individuals on the ground…
He imagines that such aggregates interact in robotic fashion through a logic of their own, unmoved by individual human initiative, creativity, or choice…
If we follow the advice of Adam Smith and examine people’s ability to consume, we discover that nearly everyone in market economies is growing richer…
THE U.S. IS THE bête noir of Piketty and other progressives obsessed with monetary inequality.
But middle-class Americans take for granted their air-conditioned homes, cars, and workplaces—along with their smartphones, safe air travel, and pills for ailments ranging from hypertension to erectile dysfunction…
At the end of World War II, when monetary income and wealth inequalities were narrower than they’ve been at any time in the past century, these goods and services were either available to no one or affordable only by the very rich.
So regardless of how many more dollars today’s plutocrats have accumulated and stashed into their portfolios, the elite’s accumulation of riches has not prevented the living standards of ordinary people from rising spectacularly…
Piketty’s disregard for basic economic reasoning blinds him to the all-important market forces at work on the ground—market forces that, if left unencumbered by government, produce growing prosperity for all. Yet, he would happily encumber these forces with confiscatory taxes.
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.
Utopia, you are standing in it! 
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