FEBRUARY 15, 2009

Everyone seems to be looking for new and unique ways for markets to figure out what they should pay for securities. Here is yet another admittedly interesting plan How to Make TARP II Work. But it seems like we are willing to try anything but actually force banks to really mark these instruments at where they can be sold. I do not think it should matter that the Treasury apparently believes these prices would be too low. We are making this far too difficult. Why will any of these ideas force prices to be higher than they would otherwise be without these schemes? And why do we want to favor sellers over buyers to begin with? This is not clear to me at all. It truly feels like Deja Vu all over again re:Tarp I. The government is willing to try anything, as long as it does not involve a real price.

(posted at 10:00 pm by Mike Rulle)

 

Explaining Hayek

I must be in a "criticize Arnold Kling mode"--see below--although my enjoyment in reading his blog has not diminished. I posted this criticism on his website of a comment he made re: Sara Palin.

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I will accept (for purposes of argument--not that I actually agree) your relatively surprising statement that:

"I think Reagan was genuinely engaged with profound ideas. Palin may have talent and charisma, but I do not think she could explain Hayek".

I will also accept the implication that, at the time Reagan ran for office, this was something that was readily discoverable about him and considered important. After all, it does us voters no good to discover after the fact that "he could explain Hayek". I will also set aside the issue of what economic philosophers in history are understood by any of our politicians.

I find your comment on Reagan, Palin and Hayek disturbing. It is illustrative of a profound mistake the professional intellectual class, as a whole, tends to repeat. Whether Palin, or Reagan, read, or even heard of, Hayek is way beside the point. The relevance of Hayek, is not the man or his books, but the "world view" he explored, believed and passionately wrote about.

Do you think one would have needed to read Hayek to come to his view of the world? Of course not. It is almost the essence of his argument that the world view he professes is part of our nature, and thus implicitly discoverable by all. Believing one needs the explanatory intellectual and verbal skills to  "explain Hayek" in order to share his world view is, ironically, a Hayekian "fatal conceit". Granted, your phrase "explain Hayek" may have been a semantic metaphor. But your simultaneous admission to "intellectual snobbery" conjoined with your belief in Palin's inability to "explain Hayek" makes that seem less likely. It is not intellectual snobbery to believe a person who does not sufficiently understand the nature of our country or the world should not be president. But it is intellectual snobbery to imply that one should be able to explain Hayek (or Marx, Kant, or Hume) in order to be be president. To equate these "capabilities" would be ridiculous.

The issue, therefore, is what policies a politician proposes and why. Your admitted intellectual snobbery is surprising to me, as I have seen you express explicit opinions to suggest the contrary. I like Sara Palin. I have not fully made up my mind about her and in the end may agree she is not suited to be president. What will be on my checklist are her commitment to economic freedom, the pursuit of policies which lesson the impact government has in all our lives, and her recognition that there really are political forces in this world who want the United States weakened or even destroyed. Each of these broad policy areas, of course, has many components.

One thing not on my checklist is "explaining Hayek".

(posted at 12:00 pm by Mike Rulle)

 

I posted the following on Economics Liberty--Kling in response to this comment by Arnold Kling:

"I don't think that the arts are all that important. To me, creative innovation that matters is somebody in a lab at MIT coming up with a more efficient battery or solar cell".

This opinion raises the mysterious question, to me at least, of the service economy in general. One thinks of all the service industries which seem "unproductive" in the long (or short) run. Anything entertainment seems to fall in this category. Look at all the resources devoted to horror movies and musicals; or, look at all the resources devoted to the gambling industry; or, the mainstreaming of the massage industry; or luxury restaurants; or the car wash industry. And countless more of course.

These are activities for which one has to create a narrative "to justify" them beyond the simple demand for pleasure or relaxation. One might say that massage, or movies "refresh" or "recharge" one's spirit and body, thus making people more productive for real things like "a more efficient battery or solar cell".

Maybe they do. Yet that argument seems strained to me. I think the better argument is people simply enjoy these activities. In fact, one can reasonably make the case that "one purpose" of technological advancement is to create more time for people to pursue things other than work. One could say, therefore, that the desirability of technologies such as the "solar cell" is for the purpose of freeing mankind to pursue things which have no obvious material purpose, like "the arts".

The fact that there is so much economic demand (and supply of course) for these kinds of services is fascinating. I can see how one (myself included) can view these activities as less productive for mankind than more material technological activity. But I have a hunch that is simply a normative perspective, even just an unquestioned premise.

There is no rational economic basis to "prefer" solar batteries over the arts. At the least, if one goes down that intellectual path, it raises far more interesting--and mysterious--questions about man's nature.

(posted at 8:30 am by Mike Rulle)