Wednesday, May 4, 2016

Bernie Sanders as George Costanza in Seinfeld

The video is cute, but if liberals transition from wealth inequality to Denmark and Sweden one more time... Denmark has the #1 most unequal distribution of wealth. Sweden's is higher than almost all developed countries. You don't know what you're measuring. Settle the down and be inquisitive before whipping yourself up into moral outrage.

All? Trump believes that all Mexicans are criminals? Don't interpret your opponents from liberal land. Interpret them from how they obviously mean to be understood. When I say Americans are getting fatter, it doesn't mean all Americans are getting fatter, it doesn't even mean most Americans are getting fatter, and I shouldn't have to hedge my speech against somebody interpreting me that way. Donald Trump does have to hedge against such interpretations, and has stated explicitly that he does not mean every single immigrant, not because it isn't clear what he means, but because liberals interpret him from so far in the outgroup that they might as well be on other planets.

My money is on Hillary, and she's a far superior choice to either of the other two candidates. So why aren't I happy about it?

Friday, April 29, 2016

David Friedman's Answers to the Non-Libertarian FAQ

This is David Friedman's response to the Scott Alexander's non-libertarian FAQ. Both individuals are extremely smart, although Friedman has more experience in the relevant field. Scott Alexander is more of a very intelligent very informed layman.

A few answers I especially liked:
“As far as I know there is no loophole-free way to protect a community against externalities besides government and things that are functionally identical to it.”
Unfortunately, the statement is still true if you drop the last ten words.
The definition of market failure as "individual rationality not leading to group rationality" does not go away when the group in charge is government rather than markets. This is a human problem - that we don't link up like the borg in Star Trek and decide what's best for the collective. Maybe we don't want to be like that, but you have to admit that there are benefits. And there seems to be no way of collecting those benefits among any human institutions
“None of this wealth has trickled down to the poor and none of it ever will, as the past thirty years of economic history have repeatedly and decisively demolished the “trickle-down” concept.”
I believe that, as the term “trickle down” suggests, the theory and the name were invented by people attributing it to their opponents. On the other hand, fairly straightforward economic analysis suggests that increasing the stock of capital will tend to decrease the marginal productivity of capital and increase that of labor, hence will tend to raise wages and lower interest rates.
 I get annoyed at people who use the dismissive term, "trickle down" to describe any particular situation where doing something beneficial for a rich person might have second order positive effects on poor people. It just seems like the ultimate example of zero-sum thinking that economists are always trying to undermine.

Thursday, April 28, 2016

Koch supporting Hillary Clinton

Why Charles Koch says "it's possible" he could support Hillary Clinton. -Vox

"The underlying problem for Koch was that his very free-market libertarian agenda had never been very popular with the Republican voters. Even in the early days of the Tea Party, nobody wanted to cut government spending. As Theda Skocpol and Vanessa Williamson noted in their excellent book The Tea Party and the Remaking of Republican Conservatism, "not a single grassroots Tea Party supporter we encountered argued for privatization of Social Security or Medicare along the lines being pushed by ultra-free-market politicians like Representative Paul Ryan (R-WI) and advocacy groups like FreedomWorks and Americans for Prosperity."

Wednesday, April 27, 2016

Financial Samurai on income

This is a good article about how much the top earners make. Factually, it lines up with what I've gathered from other sources. I just wish the author had stayed factual, and didn't deviate into good-bad talk. Normative proclamations about what fair is don't interest me.

Saturday, April 23, 2016

A Need is not a Market Failure

The economic textbook lists market failures, but the public has their own much less well thought out list of what they think are market failures.

One public version of market failure is called "Needs". For some reason, they think that if something is important that means government should do it. Of course, if government is better at doing important things, then why wouldn't it be better at doing unimportant things too? Why shouldn't government do everything? It seems like the assumption is that governments are just more reliable, which is generally untrue. If it were true, then why wouldn't we just always depend on the more reliable mechanism?

Demand curves slope downward, and it's not like demand reaches a threshold beyond which something becomes a need and now economics works differently. If something really is a need then markets will produce enough of it that it will be cheap and accessible. If markets can't do that because something is scarce or hard to produce, then there's nothing magic about government that can fix that problem. Lots of people need a cure for cancer, but we don't have to resort to vague conspiracy theories to explain why we don't have one. Cancer is just really hard to cure. Can you really believe that someone couldn't make a lot of money selling a cure for cancer? Can you really believe that sick people are willing to pay more for treatments for cancer than a cure?

If we look around we will notice markets producing lots of needs; toilet paper, gasoline, and groceries for example. I would probably spend a significant portion of my income on toilet paper if I had to, but I don' t have to because normal market mechanisms keep the price low. It's untrue that producers can sell at whatever price they want because we need what they produce.

Some needs aren't produced very well, but that's not because they're needs and therefore markets can't be trusted, but because of some other market failure. Lots of economists think health care should be produced by governments, none of them think that it's because health care is important.

Tuesday, April 19, 2016

Sugar High

Someone told me that sugar highs in children are a scientific myth.

I wonder if that's true

Thursday, April 14, 2016

Why Big Pharma isn't Ripping you Off

A liberal friend of mine posted this video, instead of rebutting him I attempted to get through to the core of its liberal audience. I tried to be attentive to liberal values and language, considering Jonathan Haidt and Scott Alexander's advice concerning moral foundations and tribal signals (see #7)

Why doesn't someone just produce a competitor? 
Water is a good example of where markets don't produce competitors because of market failure. The same with a lot of infrastructure. You just can't compete when there's only one set of pipes, and several competing sets of pipes, most of which won't be producing anything just isn't realistic. So the outcomes of this market failure ends up being severely unjust. 
But on the other hand... Toilet paper is a terrible example. Why don't I have to pay 20% of my income for toilet paper? Why isn't gasoline twice as high as it is? Nobody has to fix the price of my groceries either. Even though these things are "needs" they stay accessible because someone else would sell it for cheaper if they became too expensive. 
So what about drugs? Drug patents exist with the explicit motive of making drugs more expensive. It's not a secret, it's in the economics textbook, it is stated by economic policy makers. 
But it's not just because governments are in the pockets of drug companies. The reasoning is that if a drug is expensive to invent, but easy to replicate, a lot of drugs wouldn't be profitable to invent because their profits would immediately be competed away. Government patents are sometimes a fair solution to a difficult problem. But then price fixing undermines exactly what's trying to be accomplished with the patent.

I might not like how expensive some drugs are, but I'm glad they exist for some people, and I'm glad that after a while they'll become more widely available when the patent expires. I care about people getting what they need to stay alive, regardless of whether it's through profits or greed. I'm not trying to help or hurt the rich. I'm trying to help the sick. None of that can happen if the drug never exists in the first place 
Daraprim is an interesting example of an unpatented drug where profits aren't being competed away. Why? The answer IS complicated, and I encourage anyone to look into it (maybe here:
Remember, "Because greed", is not a very complicated or intelligent story. It is not a good answer when prices go down because of greed too. Consider: every wage paid above minimum wage is because of greed as well. In a country where 2-4% of the population makes minimum wage, and median wage is $50,000, that's a lot of money being paid to ordinary people with no legal obligation to do so. Why? Because of greed. 
So I advocate a smarter form of liberalism; one that understands why markets work sometimes and under what conditions they fail. The economics textbook is written mostly by leftists. Full honestly here: popular liberal anti-market biases are as bad as anything coming out of the conservative anti-science crowd. But maybe with all the open-mind talk of the leftist people, there's some chance of a more intelligent discussion. 
I work for a Starbucks store, not big pharma.

Why is big pharma ripping you off? The important question is why doesn't every other industry rip you off even though they have the freedom to set their own prices too.