Marginal Utility

by Ken Houghton

It used to be that when someone declared themself a "libertarian," you could reasonably assume that they were a Republican who did drugs.

That myth can now officially be laid to rest. As evidence, we have, first, the quintessential "Libertarian" band, boldly declaring "If you choose not to decide/You still have made a choice":

And, as the counterpoint, the 2008 Reublican National Convention delegates, most especially the lady at 3:26 who declares "a choice is not freedom of choice."

US version:



Canadian link

I await the news of Glenn Reynolds's head having exploded.

Labels: Glibertarianism, pop music, Republican Party

by Tom Bozzo

1. Expend energy railing against the "Patriot Employer Act," co-sponsored by Barack Obama. What's to hate about it? From the Economist's Free Exchange blog (h/t Mark Thoma):

There is much to dislike in the bill. Essentially, it offers employers a tax credit, worth one percent of taxable income, in exchange for adherence to a set of economic limitations. Among them are: a minimum wage, minimum standards on retirement and health plans, and protections for workers and headquarters based in America.

Yeah, that Obama sure is History's Worst Monster for wanting to give corporations a modest tax incentive to do that sort of stuff. (They do need to hire a Frank Luntz type to come up with a better short title for the bill, though.)

A couple of European academics go much further in calling this package "reactionary, populist, xenophobic and just plain silly." It perhaps goes without saying that, were Willem Buiter and Anne Sibert somehow to lose their sinecures, they wouldn't have to pray to the gods of health that they not get too sick for a while. Or perhaps they're just part of a movement, which I've found curious, of neoliberal Euroeconomists who seem want to show their pals at Chicago how tough they are. Or, as Charlie Stross put down New Labour:

And lo, in the thrusting entrepreneurial climate of the early nineties a new government came into power with the remit to bring about the triumph of true socialism by privatising the post office and air traffic control systems...

And it might be prudent to verify that the U.S. doesn't get thrusted by its entrepreneurial climate before frothing at the mouth about the evils of populism.

(Cross-posted to Scatterplot.)

Labels: Economics, Glibertarianism

by Tom Bozzo

Megan McArdle writes:

[W]hy is America's high-speed rail so dreadful? [...] The answer is that the Acela uses existing track, which is twisty, the better to serve every congressional district between here and Boston.

The little problem here is that this was either pulled out of her backside, or perhaps more likely pulled out of the backside of a libertarian welfare recipient who'd had a few too many at some U St. bar and duly parroted on the website of the Atlantic. (The pulled quote is prefaced as part of a "discussion" she'd been in "recently.") This is linked approvingly by the theoretically more trustworthy Tyler Cowen at Marginal Revolution, where McArdle's account is smacked down in the thread's first comment. (See Stephen Karlson for the extended version.)

This seems par for the course for Ms. McArdle, but what's Cowen's excuse?

Largely unmentioned anywhere is that the correct answer to why America's high-speed rail is so "dreadful" — in our neck of the woods, we say, "nonexistent" — that is, chronic underinvestment in rail infrastructure.   Karlson makes his usual [*] point that outside of the Northeast Corridor, perfectly useful 110 MPH trains could be run over a lot of existing track with mostly regulatory changes.  But remember, for approximately the price of reconfiguring the runways at O'Hare to accommodate air traffic that may never (future path of oil prices and all) materialize, you could build 300 km or so of electrified 350 km/h line.  The French did.

Labels: Econoblogs, Glibertarianism, Trains Planes and Automobiles

by Tom Bozzo

I haven't been impressed by the output of the AEI-Brookings Joint Center for Regulatory Studies before, but Felix Salmon is back and points to a hit piece on the CAFE standards by Robert Crandall of Brookings and Hal Singer of the consulting firm Criterion Economics — not uncoincidentally written for the Wall Street Journal's loony op-ed page — that reads like it was written by the Heritage Foundation's densest intern on a bender.

It's hard to pick what among the piece's abundant rubbish deserves highlighting. You might think that one thing that's clearly within economists' purview is measuring the pecuniary costs and benefits of policy changes. Not so, say Crandall and Singer!

Ask any economist and he'll tell you that estimating the private costs and private benefits of increasing fuel economy is a fool's errand.

Right, because figuring out how much money consumers would save from burning less gas is just about the hardest cost-benefit analysis task in the world, which is why the calculations for this post took literally minutes to carry out. But I should have been satisfied that the magic market pixies have already ensured that every cost-effective technology has already been adopted!

With large numbers of vehicle producers and well-informed consumers, the market is so efficient, in fact, that it ensures that all such transactions will occur, generating the socially optimal level of fuel economy.

Well, that settles things, since a public that once majority-approved of George W. Bush's job performance could never incorrectly weigh the life-cycle costs of their durable goods purchases! (And the volume of SUV purchases has nothing to do with the marketing efforts to convince people that this is cool and this is not. [*])

There's the scary if totally undocumented claim that there would be big costs to higher fuel economy:

According to our preliminary estimates, every new GM customer would incur a net loss of several hundred dollars under the newly proposed standard, as the higher cost of the car would exceed the discounted fuel savings.

I can only assume that the "higher cost" is the (IMHO exaggerated) $4,000-$4,500 claimed by Bob Lutz for a diesel meeting U.S. emissions standards. Perhaps Crandall and Singer have also lowballed future fuel prices, since current levels seem highly optimistic as a forecast of the prices prevailing at the end of the next decade.

As I've previously shown, such engines can pay for themselves in fuel savings at existing fuel prices with no performance shortcomings, and current-technology 35 MPG midsize hybrid sedans don't sport premiums of nearly that size. Today's news from Frankfurt includes Honda's announcement that its new diesel four (expected in the U.S. Accord) meets U.S. emissions standards and will outperform its well-regarded predecessor — which turns in 42 MPG in the Euro Accord (aka Acura TSX) and still 36 in the aerodynamically-challenged CR-V — in power, torque, and fuel economy.

In fact, Crandall and Singer take a prize for what corporate cash can persuade the theoretically respectable to write. Behold, commentators who won't even pay lip service to the idea that U.S. oil dependency is a wee problem:

Even if one accepts the debatable proposition that less reliance on oil would improve our national security, we should focus our attention on all oil consumption, not just that used in new vehicles. [Emphasis added **]

I guess Michael "If Supplying Material to the Washington Times Doesn't Get You Knocked Off the Serious People List, It Should" O'Hanlon got to them on that one.

[*] Example adapted from actual vehicle purchase decision in my immediate family.

[**] I don't disagree with their claim, but it's at best in the spirit of making the perfect the enemy of the good.

Labels: Glibertarianism, Trains Planes and Automobiles

by Tom Bozzo

Bradrocket:

God, can you imagine what Megan McArdle’s gonna be like when she has kids of her own and they ask her for lunch money?

“For that to be moral, the entire enormous class of school children who are hungry and unemployed must have some justified claim on the money of their working parents,” she’ll tell her weeping son.

Meanwhile, an outer sociologist meets Tyler Cowen's inner economist and isn't so impressed.

To commenter Ralph Hitchens, you could find commentary on Freakonomics (e.g., Jeremy's) that acknowledged that some of the underlying real research was interesting without succumbing to the hype. I guess I was dissuaded from picking up Freakonomics by elements of what struck me as falsity in Stephen Dubner's original NYT magazine article on Levitt that serves as the enterprise's frame tale and/or creation myth. [*] Plus, Levitt very helpfully makes much of his research available online. Let me say that while I think the "freaks and geeks" critique of Levitt is unfair, I'd be interested to spy on a parallel universe in which Levitt, who professed, "I'm not good at math, I don't know a lot of econometrics, and I also don't know how to do theory," accordingly graduated from a 20th ranked PhD program.

As for Inner Economist, well, why buy the cow when I can gaze at my navel for free?


[*] For instance, "The average economist is known to wax oracularly about any and all monetary issues. But if you were to ask Levitt his opinion of some standard economic matter, he would probably swipe the hair from his eyes and plead ignorance."

Labels: Econoblogs, Economics, Glibertarianism

by Tom Bozzo

Arnold Kling responds via comment to Ken's post:

I disagree with your interpretation of my essay. I did not say that getting screened for colon cancer is a bad idea. I just said that it is not a human right. I did not say that clinical trials are a bad idea. I just said that undergoing a therapy that is just in the clinical trial stage is not a human right.

Going to the replay, Kling said:

But none of these medical services [diagnosis of a back injury, colonoscopy, experimental treatments] is a necessity. You would not say that someone's human rights were violated if they did not obtain these services.

The problem is that neither "necessity" nor "human rights" is defined. He might as well say:

But none of these medical services is a blimlimlim. You would not say that someone's dalg glidj were violated if they did not obtain these services.

I mean, who could argue with that? [*]

Since actually "necessity" and "human rights" aren't (or at least shouldn't) be nonsense words, we can argue. At EconLog, it can be hard to find a "right" that's defended beyond the "inalienable right to the fruits of [one's] labor." [**] Even on that score, Kling is on thin ice. He grants that colonoscopies "may be a helpful precaution against colon cancer" seemingly without recognizing that "helpful" means "preventing untimely death," which is the ultimate alienation of property, and I don't mean by terrestrial taxation. (Also, the age and frequency recommendations for colon cancer screening already involve some cost-benefit calculations, raising another question of just what Kling considers "cost-effective health care.") Diagnosis of back injuries can mean the difference between the ability to work and the ability to collect a disability stipend.

The care may not be "necessary" in a guarantee-of-success sense, but nevertheless there's a clear nexus betwen health status, health care, and the Lockean rights that Cato Institute libertarians may like to claim.

Kling continues:

As to uninsured children, if they are orphans then certainly it makes sense for the government to insure them. Otherwise, their families have the primary responsibility for paying for their health care. I stand by my position.

I stand by Kling's "right" to stand by his position [***], but this doesn't do much to rebut Ken's claim that libertarianism run amok makes people think (some) economists are bonkers.

Surely, you might say, someone with a PhD in economics from MIT (as has Kling) must be aware that there's some middle ground between "orphans" and children of better-off parents who voluntarily self-insure (if any). Not so fast! Kling was a perpetrator of one of those "the poor never had it so good" arguments you see every once in a while, including (I sh1t you not) a subhead "The Disappearing Lower Class." [****] That once led me to offer what I now might call "Shorter supporters of the bankruptcy bill:"

The poor and working classes aren't poor because they have access to better cars, occasional air travel, VCRs, microwave ovens, and washing machines. However, they shouldn't have spent their (or their creditors') money on any of it.

Or, if you want to think of the issue in such terms, both household budget constraints and relative prices partly why the relatively poor can enjoy some modest amenities of millennial technology while lacking in health insurance and/or routine health care.

You can add up everything a not-that-well-off family spends on modern conveniences and not come close to the price of a health plan that covers preventive care. In such cases, which I submit without proof are not uncommon among the uninsured and underinsured, there isn't a real choice at hand.

Or, if people "choose" to consume preventive health care at inefficiently low levels but will respond to prices, then they have to have a lower price put in front of them to fix whatever incentive problem there might be. This is, perhaps not surprisingly, the opposite of what most "market-based" health care "reforms" would do — i.e., raise effective prices of certain health care services in hopes that people consume less.

Believe it or not, Kling's comment here is a less crass formulation of his argument than what he offers on his own blog:

But are those children all orphans? If not, then I think that their parents can be held responsible for paying for their health care. If the parents choose not to buy health insurance, then they may have to pay cash or take out a loan to pay for medical services...

It strikes me that the advocates of expanding SCHIP, the Federal program that covers children, have successfully framed the issue as if the children were all orphans. This ought to go down as one of history's finest achievements in demagoguery.

This may go over swimmingly at the Cato or Club for Growth water coolers, but in the rest of the world, "that'll learn their parents to be more responsible" isn't the first thought (perhaps even in wingnuttier districts) when a kid who has chosen his or her parents badly gets sick.

[*] Apologies to the estates of Margaret and H.A. Rey. I actually don't argue with Kling in regard to the right to experimental or unproven treatment, but that's a plastic apple mixed in with edible oranges in his post.

[**] Which, to steal a phrase from Stephen Pinker, "would have been unthinkable throughout most of human history," and remains totally impractical today.

[***] It gives us stuff to blog about, if nothing else.

[****] They could be said to "disappear," after a fashion, if one can limit one's routine to the libertarian paradises of upper-middlebrow suburbia.

Labels: Economics, Glibertarianism, Health Care