Nightcap

  1. Jack Schwartz on the weaknesses of the Mathematical Mind David Glasner, Uneasy Money
  2. Did the Thirty Glorious Years actually exist? Vincent Geloso, NOL
  3. A hidden cost of the War on Drugs Vincent Geloso, NOL
  4. Star Trek did more for the cultural advancement of women than government policies Vincent Geloso, NOL

Shares of Income – Common Left Delusions

Two big conceptual mistakes are hidden in one small graph that help the leftist delusion.

1. I do not contest the data. I have not checked them. They may be correct. I don’t know; I have another purpose.

2. People who use this graph (though not the makers of the graph, maybe) implicitly assume that those who were in the top income 1% in 1980 are the same as those who are in the top 1% in 2016, or their parents.  The graph says nothing about this. One thing is clear: Steve Job or his parents would not have been in the top 1% in 1980; Steve Jobs would have been, for sure, in 2010, his estate in 2016. The graph does not show the perpetuation of privilege and of inequality, as users almost always imply. Suppose that 100% of those who were in the 1% in 2016 were not (or their parents, or their grandparents) in 1980. This would show a fast change of economic elites. It might pose a problem but not the problem the envious imply when they display the graph.

noldelacroixsharesofincome

The problem here is intellectual passivity.

3. The percentage of income that accrues to a given fraction of the population – including the top 1%  – tells you nothing about how well anyone has fared economically, whether anybody is richer or poorer than he was at the beginning. Here is an example: Suppose, you and I both earn $1,000 at the beginning of the period of observation. Thus, we each get 50% of our joint income (1000/2000). Suppose further that during the period observation, my income doubles while yours quadruples, I am now getting only 33% while you are getting 66% (2000/2000+4000 vs 4000/2000+4000). My share in percentage terms has declined while yours has ballooned. Question: Am I now poorer than I was at the beginning of the period? That’s a “Yes/No” question.; don’t equivocate. The problem is here is failure to understand elementary school math.

The chart is produced by the World Inequality Organization, a single purpose outfit not dedicated to the possibility that inequality may be decreasing. The data it offers have not been certified by the usual scholarly processes  This organization’s executive committee includes Thomas Piketty who could not get his data straight in his best-selling book. He had to refer critics to a website to get his story down. The earlier edition of the same book became famous for not including in US calculations: food stamps, rent support, free medical care, and more, in US welfare recipients’ incomes. I don’t know the others, which may or may not matter. Too many Europeans for my taste. I don’t like it, from 40 years of observation. That last remark is somewhat subjective, of course.

Together these simple comments add up to this critical judgment of the relevant chart: Either, those who use it normally don’t know what they are talking about or, they are not saying anything that matters.

RCH: Antarctic history

Longtime readers of NOL know I have a strange obsession with Antarctica, and the murder that happened on the continent earlier this week gave me the perfect opportunity to write about the southernmost continent for this weekend’s column at RealClearHistory. Behold, an excerpt:

6. The Gauss Expedition (1901-03). The Germans got in on the Antarctic act, too, even though Germany only formed as a country in 1871. The Gauss Expedition got trapped by ice for 14 months, but the gas balloon that the Germans brought along was put to good use while they were trapped. The photo above was taken in a balloon the Germans floated above their trapped ship. Johann Carl Friedrich Gauss, by the way, is one of history’s most important mathematicians, and many rank Gauss second only to Newton in mathematical importance.

You’ll have to read the whole thing if you want to see the photo (it really is a thing of beauty).

Nightcap

  1. Delacroix and his followers? Joe Lloyd, 1843
  2. Cortés and his allies Álvaro Enrigue, NY Review of Books
  3. God and the mathematicians Josephine Livingstone, New Republic
  4. Comey and the libertarians Stephen Cox, Liberty Unbound

Nightcap

  1. Canada’s Jews: Maple Leaves and Mezuzahs Bruce Clark, Erasmus
  2. We’re still no closer to the end of Pi Oliver Roeder, FiveThirtyEight
  3. Why is Trump turning his back on Iran’s Christians? Doug Bandow, the Skeptics
  4. What’s divine about divine law? Jacob P. Ellens, Law and Liberty

Economists are special, but what about Palestinians and American blacks?

I’ve got the post-Thanksgiving flu. I know which toddlers are guilty of infecting me, and which aunts and uncles are responsible for this egregious assault on my happiness. Revenge will be sweet.

I’d like to get to Warren’s smackdown of my reparations proposal and also to Matthew’s thoughts on justified violence against the state (which were indirectly related to my own post on Ferguson), but first I’ve got to get to two interesting topics that have piqued my interest.

The first is Irfan Khawaja’s recent critique over at Policy of Truth of Jason Brennan’s new book on voting. As usual, Khawaja brings up a number of great points (too many, actually, for a lowly ethnographic enthusiast like me), and they deserve to be read by all (be sure to check out the ‘comments’ thread, too).

Here is an excerpt (Khawaja has flipped the tired script of many American academics by bringing in a fresh perspective):

I can’t work through all the details here, but take a look at Brennan’s argument in light of the preceding. Either my East Jerusalem case is a counter-example to his thesis, or it’s a defeater for it. In the first case, it refutes the thesis as stated. In the second case, it suggests that the thesis is highly misleading as stated. Given that, my argument requires that Brennan qualify his claims about the ethics of voting in ways that take more explicit stock of cases like the East Jerusalem one–something that would substantially change the “flavor” of his theory.

Brennan’s work has, of course, gotten a lot of excellent treatment in libertarian circles because of both his blogging activities (hint, hint, slackers) and because libertarians have a long, storied distrust of democratic politics (though this is largely an anarchistic distrust rather than the conservative-aristocratic one we North Americans think we are familiar with).

Switching gears, I also need to comment on an interesting paper (pdf) about the “Superiority of Economists” I came across over at MR. It was written by two sociologists and an economist, and it has a number of excellent insights (MR‘s link to the paper was broken, but MR also provided a link to comments by economist Paul Krugman, and his link to the paper was unbroken).

Most of the paper is a rehash of arguments about economics relative to the other social sciences (and the humanities) that libertarians have been having for a long time. (In my anecdotal experience, libertarian economists are quickest to defend the profession of economics from detractors, but they are also the quickest to defend the other social sciences from detractors (and, more importantly, incorporate non-economics research into their own). Leftist and conservative economists, by contrast, condescendingly acquiesce to attacks from other disciplines, but are also very, very disdainful of The Others’ contributions to research.) Libertarian economists generally share the same suspicions as The Other disciplines about the ability of economics to imitate the physical sciences using mathematical models (or that these models are even indicative of how humans “work”). See Warren’s piece (pdf) in Econ Journal Watch for more on these suspicions.

The last section before the conclusion (“A life of their own”) is really good and totally worth the click. It’s about economists and their relationship to everybody else in their society (this paper is made better by the fact that it is written by French academics with an intimate understanding of life in both the US and France, just like some other scholar that we all know and loathe love).

On page 18 the paper cites a few studies and lab experiments which have purportedly shown that people who study economics are, on the whole, less likely to cooperate than everybody else. There are a number of implications that the paper goes over (“does economics attract a certain type of personality?”, for example), but I wanted to focus on what is not discussed in the paper: The fact that economists probably have a different (actually, a more coherent and precise) understanding of the meaning of cooperation. Many criticisms of economics are clearly made of straw. One of the things that initially attracted me to libertarianism was the intelligent, well-informed critiques of economics as I then understood it (“homo economicus“) that were given by libertarians.

I also learned, on page 19 and contra Dr Amburgey’s repeated assertions, that economists are politically (and decisively) to the Left of the average American voter.

Another fascinating page 19 insight is that there is more income inequality ($57k gap between the top 10% and the median) in economics relative to other disciplines, but on this point the authors lose a golden opportunity to do some real sociological analysis (the authors focus instead, and predictably, on the economics profession’s recent prosperity as a whole relative to other academic disciplines; that is to say, on the income inequality between economics and The Others within academia). Earlier in the paper (7-14) an organizational comparison between economics and The Others highlighted the fact that the economics community tends to be more hierarchical, more incestuous, and possesses a “unitary disciplinary core,” which means that virtually all graduate schools teach the same concepts. The Others, in contrast, are “more decentralized, less cohesive, and [possess] less stable prestige rankings.” (9)

The most basic insight that stood out to me when I read the data on incomes was that the disparities and organizational structures of the social sciences and humanities represent a microcosm of society as a whole (pick any ole society you’d like): When rigid hierarchies are enforced, conformity and parochialism (incestuous is too strong a word here) arise, income inequality is more prevalent, and the pecking orders are more entrenched.

In contrast, societies that are “more decentralized and less cohesive” have more variety, much less deference to an established authority (such as a pecking order), and less income inequality ($42k gap between the top 10% of sociologists and the median). There are less women in economics relative to the other disciplines, and the median economist almost has the same income as a top 10% sociologist ($103k to $118k, a difference of only $15k).

Well, this post has already gone on for far too long (I hope to use it as a springboard for future musings) but I will end by noting that on page 23 the paper points out that economics is a very moral discipline, which is something non-libertarian economists vehemently deny. Libertarian economists, on the other hand, have been pointing this out for centuries.

A New Chicago School?

Consider America’s transportation system. I like to imagine that it ought to be a certain way. I imagine a world where a lot of freight travels competitive rail lines. And occasionally a transport truck traverses the country side, maybe to serve a new or small market without a rail road. I imagine a truck entering a town, passing some sort of device that alerts the local police that a vehicle has entered the town without the appropriate toll-paying transponder. Since this is the first time this has happened, the officer hands the trucker an application and signs him up on the spot. Oh! And there aren’t major freeways all over the place. Just a lattice work of efficient highways skirting the edges of towns and winding byways trailing through the country side. Perfect motorcycling roads and beautiful markets all in one.

My perfect world wouldn’t have much room for the fast modern engines we’re used to cars having. Planes and trains are fast enough for long distances and for shorter distances we simply don’t need to go so fast. The technology in those modern engines is malinvestment. That capital exists because interference with markets has skewed the relative financial benefits of different research (e.g. at the expense of investment in technology necessary for seamless and efficient toll-roads). This skewed capital structure also indirectly subsidizes fast-food while implicitly taxing the experience of traveling through, rather than past, small towns.

But what would actually keep it that way? It’s all a bit too good to be true. Am I being Utopian? Yes, but I think there might be some merit in that. My utopia can be thought of a limiting case; one of many possible best-case scenarios. We might conceive of a yard stick akin to Pareto Optimality but in a dynamic setting.

The world can be dynamically-Pareto optimal and have economic profits, but only those that arise as a result of productive entrepreneurship. Actions that create net value should be the only ones that generate profit. And externalities (whether pollution or politics) should be resolved by property rights and liability law. At least in the long run.

Such a world would serve as a benchmark in exactly the same way as Perfect Competition, and I would name it similarly. Perfect Markets (I’m open to suggestions) would be those that are simply too perfect to exist in the real world, but would offer a limiting case against which differing scenarios might be considered.

I suspect that something like this has already been offered but I’m only slowly working my way through one work and it will be a while before I get to another notable work. That first (from the Austrians) I suspect would be (justifiably) critical of what I’m discussing and perhaps it is a project best suited for applied mathematicians. It would certainly allow a good deal of theorem proving and other apparent mental master–… mastery (yes… mastery…). For some time there might be little apparent use or scientific merit in this. But number theory only became valuable with the advent of computers centuries after mathematicians started thinking about the minutiae of numbers. It’s not always for us to say that something doesn’t have a use just because we don’t see it yet. It’s a good idea to let some curious mathematical tinkerers doddle away at problems; they might turn out to have offered a valuable and useful gift to future generations.

What Good Are Mathematical Models for the Science of Economics?

This question comes from co-blogger Warren Gibson’s piece in Econ Journal Watch titled “The Mathematical Romance: An Engineer’s View of  Mathematical Economics”:

Mathematics can be very alluring. Professional mathematicians speak frequently of “beauty” and “elegance” in their work. Some say that the central mystery of our universe is its governance by universal mathematical laws. Practitioners of applied math likewise feel special satisfaction when a well-crafted simulation successfully predicts real-world physical behavior.

But while the mathematicians, some of them at least, are explicit about doing math for its own sake, engineers are hired to produce results and economists should be, too. It’s fine if a few specialists labor at the outer mathematical edge of these fields, but the real needs and real satisfactions are to be found in applications.

Western civilization has brought us an explosion of human welfare: prosperity, longevity, education, the arts, and so on. We very much need the wisdom that economists can offer us to help understand and sustain this remarkable record. What good are engineers’ accomplishments in crash simulations if the benefits are denied to the world by trade barriers, stifling regulation, congested highways, or bogus global warming restrictions? What can mathematical economics contribute to such vital issues?

You can read the whole thing here (it’s also in the newly-renovated ‘recommendations’ section). Highly, uh, recommended! Mathematics is an important aspect of economics, I think, but Dr. Gibson and other Austrian critiques are more focused on the models that economists create rather than all of the wonderful data that can be quantified for calculation purposes.

I may be wrong, and I hope that my co-bloggers or others will correct me if I am, but either way Dr. Gibson’s critique of the mathematical models employed in the economics profession needs another good look.