The Trickery Behind Keynes's Flippant Remark about the "Long Run"

The Trickery Behind Keynes's Flippant Remark about the "Long Run"

10/08/2018Jim Cox

“In the long run we are all dead.”

This famous retort of the most influential economist of the twentieth century, John Maynard Keynes, was meant as a rebuttal to the views of the classical or free market economists. The entire quote reads:

But the long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again. [A Tract on Monetary Reform, p. 80]

Unfortunately, most rejoinders to this quote from Keynes have focused on the value of long-term thinking in economic analysis, when in fact; the issue is just as surely the nature of the analogy itself. And since most casual readers of Keynes’s quote will be taken with the clever and telling point regarding the thought of economists, it has persuasive power.

But if we are to stop would-be Keynesian propagandists from scoring points with the phrase we must reveal the sleight of hand concealed therein. The nature of this sleight of hand is to take an event occurring in nature, a storm, and treating a depression as if it, too, were an equally and randomly occurring event of nature.

So, while a storm may be a natural occurrence, this is not the case with an economic depression. A depression is caused by intervention into the economy in the form of monetary expansion — hence the boom preceding the bust. With this kept closely in mind we can rephrase Keynes’ quote using an act of human shortsightedness that will render Keynes’ cleverness the thinking of fools:

Economists set themselves too easy, too useless a task if in the case of an extensive drinking binge they can only tell us that once the alcohol’s effect is long past the drinker will feel better again.

It becomes very evident why Keynes chose his particular example for ridiculing long-run thinking economists. By rendering the depression as analogous to a storm at sea, Keynes has taken all focus off the act — artificially increasing the money supply and thus lowering interest rates so that malinvestments accumulate — leading up to the consequences of that act, and thus is relieved of any analysis of the activity which would result in an economic depression.

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"We Find Ourselves Back with Deja Vu" Jeff Deist on the US Housing Market

12/03/2018Jeff Deist

Today Jeff Deist joined Natasha Sweatte of RT to discuss the state of the US housing market.

Experts Predict US Housing Crisis As New Home Sales Plunge

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About Civility...

11/30/2018Jeff Deist

The foundation of any and every civilization, including our own, is private ownership of the means of production. Whoever wishes to criticize modern civilization, therefore, begins with private property.
Ludwig von Mises.

Civility is the word of the moment.

New stories lament the breakdown of civility in American society, while reports of Antifa street violence in cities like Portland raise uncomfortable memories for older Americans of 1960s riots. Editorial after editorial decries the loss of social cohesion and friendliness across the country, even within families. Pundits and politicians insist we must restore civility in politics. Otherwise we face a bleak and intensifying cold civil war: progressive vs. conservative, urban vs. rural, #metoo vs. Brett Kavanaugh, elites vs. populists, and Never Trumpers vs. Deplorables.

Yet how do they propose to accomplish this? More politics, more elections, and more top-down edicts from Congress and the Supreme Court.

Hillary Clinton, for instance, suggests civility will be restored only following successful midterm elections that places Democrats in control of Congress. And why not? The political world is all she knows, and the political world yields winners and losers, victors and vanquished. In her utterly politicized worldview, things will settle down only when the right people—her people—control US politics. Hers is a zero-sum world, always ruled by the political gang in power.

We hardly should expect an America so wracked by politics to remain civil.

But Ludwig von Mises understood a different world, one organized around property and trade rather than the state. To him, private property was the basis of any civilized society. Without that foundation, without property and a concomitant system of mutual exchange, he knew humans were destined to devolve into poverty, war, and anti-intellectual savagery. Property gives us prosperity, and therefore material abundance to live civilized lives beyond mere the subsistence that marked most of human history. Property rights give us the ability to accumulate capital, to invest in higher productivity, and to have a greater degree of certainty regarding the future.

Civility cannot be sheared from the broader concept of civilization itself. Both words share the same Latin root civilis, which means relating to citizenship or public life. But it also means relating to others with courtesy, manners, and affability. If civilization is the sum total of a society and its culture, civility—or the lack thereof—is its building block, the positive or negative social traits exhibited by people in that society.

Lew Rockwell, our Founder and Chairman, has a long career fighting for both civilization and civility. Along the way he met some of the brightest lights of our time or any time: Neil McCaffrey, Henry Hazlitt, Leonard Read, Percy and Bettina Greaves, Ayn Rand, Ludwig and Margit Mises, Ron and Carol Paul, and Murray and Joey Rothbard among them.

So I'm sure you'll enjoy my recent interview with him. With the help of Mrs. Mises, whom Murray Rothbard called a “one-woman Mises industry,” Lew Rockwell set about saving the work and name of the 20th century’s greatest economist from obscurity. Today Mises is known around the world, and cited even by his harshest critics as a champion of laissez-faire who fearlessly challenged the supposedly scientific case for socialism.

Don’t miss David Gordon’s review of Kirkpatrick Sale’s remarkable book Human Scale Revisited: A New Look at the Classic Case for a Decentralized Future. Sale is no libertarian, and even an anti-materialist, but he understands the risks posed by consolidated political power. Thus he thinks the 20th century’s trend toward larger and larger centralized states, prevalent both in once-confederated Europe and America, has been harmful to community, peace, and human flourishing.

To Sale’s credit, he is one of many thinkers from around the political spectrum challenging the accepted wisdom that political globalism and political universalism are per se beneficial. Just as Mises elevated self-determination to a defining principle of liberalism, progressives, conservatives, and libertarians increasingly see subsidiarity and decentralization as defining characteristics for a peaceful future.

Speaking of peace, on behalf of everyone at the Mises Institute let me wish each of you a very Merry Christmas, a Happy Hanukkah, and a peaceful, happy New Year. All of us want peace and prosperity for the world; all of us share a (true)liberal worldview, and all of us understand how non-interventionism in both the economy and world affairs is key to a better future. Let us all commit to making the world a better place next year through our own contributions.

We have big plans at the Mises Institute for 2019—unique, outside-the-box speakers at events, new podcasts, a new entrepreneurs platform, and new opportunities to earn academic credentials from the Institute—and we hope you’ll be part of them.

This article first appeared in the November/December issue of The Austrian.

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Fewer Guns, Less Crime? Not in Europe

11/28/2018Ryan McMaken

As an addendum to last week's article on the prominence of civilian-owned guns versus homicide rates, it may be interesting to look at the diversity in gun prominence across European countries.

Contrary to the broad generalizations and over-simplifications spread by US gun-control advocates about European gun control, there is actually quite a diverse range in gun prominence and gun control laws across Europe.

Returning to the Small Arms Survey data, released earlier this year, we see that gun prominence in Europe ranges from 2 per 100 people in Hungary to 39 per 100 in Serbia:

gunsrateeuro.PNG

Comparing these numbers to homicide rates, however, we clearly don't find much of a relationship at all.

gunsrate.PNG

Homicide rates in nearly all cases are below 2 per 100,000 which is a very low rate by any global or historical standard.

But, as we can see, civilian guns in Austria, for instance, are six times more numerous what they are in the UK. But the homicide rate is lower in Austria. Similarly, there are twelve times more civilian guns in Switzerland than in the Netherlands. Yet both countries have about the same homicide rates.

Attempts at proving causality here then especially starts to go off the rails when we look at Russia. In Russia, there is a modest 12 guns per 100 people — which is about half the Swiss rate. And yet the country's homicide rate is 10.8 per 100,000.

What can explain these large differences?

In the case of Russia, at least, we certainly can't blame things on lax gun control laws. Gun ownership requires registration and licensing. Handguns and rifles with shorter barrels are tightly controlled.

By contrast, guns are easier to acquire in Switzerland, Finland, Serbia, and Austria — although we find registration and licensing requirements in most cases. Especially notable is the Czech Republic which, by European standards, has very lax gun laws. In fact, it is remarkably easy to acquire a conceal-carry permit in the country, and more than 200,000 such permits (in a country of fewer than 11,000,000 people) have been issued.

The Czech republic has also made headlines in recent years by additional legislative efforts to further ease gun restrictions in certain cases.

The Czech Republic, by the way, has one of the lowest homicide rates in Europe, at less than one per 100,000.

Household Gun Ownership vs. Gun Prevalence

It is helpful to remember, though, that even in cases where gun prevalence is high, gun ownership rates (on a household basis) might still be low. That is, it's entirely possible in some cases that only a small number of people own most of the civilian guns that the Small Arms Survey says exist. This could lead to a situation in which few people have guns in spite of there being a large number of guns overall. However, while this is theoretically possible, it has not been demonstrated to be a common occurrence. Moreover, this lopsided situation is more likely in poorer countries where the high cost of firearms, combined with government-mandated licenses, is prohibitive for much of the population, leaving ownership a realistic option open to only a relatively few wealthy residents.

International comparisons in gun ownership rates, however, are hard to find. Most articles that purport to make these comparisons are usually using the Small Arms Survey data, and are thus just comparing gun prevalence.

(At the very least, considering both high gun prevalence and relative ease of purchase in countries like Switzerland, Austria, and Serbia, we have good reason to believe that both gun ownership rates and prevalence are comparatively high in some areas of Europe.)

Few gun control advocates trouble themselves with these details, however. For many, it apparently remains good enough to simply conclude "more guns=more crime," even when the numbers fail to show much connection at all.

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Intergenerational Conflict Will Get Worse

11/28/2018Jeff Deist

The excellent British online magazine Spiked recently published this article warning about deteriorating attitudes toward elderly people in the UK.  As the article points out, there is more to the problem than logistical and financial concerns about providing socialist medical care to an aging population. Nor do increasing lifespans in the West, with attendant increases in loneliness and age-related morbidity, account for this unhappy state of affairs. No, the root of the problem is simply a lack of caring and empathy, made worse by fewer intact multi-generational families and alienation between taxpayers and pensioners:

These are not just technical questions for the social-care sector to grapple with. They are far bigger than that, touching upon the issue of what kind of society we want to live in, and what we expect of each other. At root, there is the issue of what we regard as individual and collective responsibilities; and what the duties of the young are to the old; and the question of how elderly people come to decide for themselves how they should be cared for later in life.

More than that, the problems facing the social-care system need to be understood in the context of a wider generational hostility that is compounding, if not driving, a longstanding official neglect of older people’s care. 

Sad, yes, but entirely predictable. Britain, perhaps faster and more vigorously than most western countries, has fallen prey to the doctrine of "presentism": an ahistorical narrative in which the past is always bad and repressive, feelings and "lived experiences" (generally quite lacking among the young, yes?) prevail over facts, and group identity dictates ideology. If the past is all wrong, the people who lived in it and even prospered during it surely are not to be admired or cared for:

‘Negativity about ageing and older people is pervasive in our society’, says Caroline Abrahams at Age UK. Whether it’s the nasty sentiment that Brexit voters are a bunch of selfish old bigots whose demise can’t come too soon, or that Baby Boomers have been piling up problems for moaning millennials, or that old people are just getting in the way with their ‘bed-blocking’ and their unreasonable expectation that younger folk should subsidise their state pensions, free bus passes, TV licences and winter fuel allowances – again and again, we see generational disdain for older people. 

Democracy, as usual, doesn't help. Brexit voters in the Leave camp skew older, more rural, and more "English." Remainers skew younger, urban, and more "European." In their 2014 independence referendum, younger Scottish voters overwhelmingly chose to leave Britain and fully embrace the European Union; older Scots chose the perceived safety of London pensions over counting on Holyrood and Brussels State pensions and state-provided healthcare, even more sacrosanct in the UK than Social Security and Medicare are here, will never be reduced or addressed by voting. Yet just as the American entitlement system faces a $200 trillion shortfall—the likely cost of future promised benefits minus likely future tax receipts— Britain's younger taxpayers will struggle mightily in coming decades to pay ever-expanding old-age pensions.

America is in the same boat, with the population above age 65 set to double over the next thirty years. Republicans and Trump voters are older, whiter, more rural or suburban, and more likely to see America in far rosier terms than the average Ocasio-Cortez supporter. Social Security, which in 1940 boasted more than 100 paying workers to one beneficiary, today struggles with a ratio of less than 3 to 1. And those three workers in many cases are decidedly younger, more left-liberal, less white, and less affluent than the one beneficiary. Unskilled workers, recent immigrants, and teenagers often work at low-wage hourly jobs, but still pay full Social Security taxes on their meager earnings. 

All of this is a recipe for intergenerational strife. 

The baby boomer mantra—never trust anyone over 30— is now bequeathed to millennials, but for very different reasons. In many senses millennials are more conservative than their grandparents were at the same age, particularly when it comes to sex, recreational drugs, education, and a carefree live-for-today attitude toward life. There is no millennial version of Easy Rider or American Graffiti; slacker paeans like Superbad show teenagers with low aspirations and no interest in eclipsing boomer noncomformity. But millennial distrust for older Americans is based on the strong perception that today's economic and social horizons are far less robust for them than previous generations, generations that are happy to ride out the clock until entitlements run out.

It will get worse. Cultural, economic, fiscal, and political fault lines in America today all bode ill for harmony between younger and older generations. But what should we expect in a country where politics and government dominate? Where transfer payments dominate old age and government schools dominate youthhood?

Family, religion, and civil society don't play nearly the same role for young people today as for Baby Boomers, who rebelled against all three. What we're left with, in the view of many Americans, is a society where government is the only thing we all belong to. Many scoff at the notion of any natural order, without recognizing that government simply substitutes an unnatural political order run by those in power.

Sensible societies harness the energy, optimism, and beauty of youth in productive ways: their talents are unleashed in art, athletics, business, and technology (not war). But apart from standout exceptions young people are not the leaders of sensible societies, because we recognize that what one believes at 16 or 20 or 25 will change, and often change radically. So sensible societies venerate the wisdom of older people, wisdom that is separate and distinct from mere information. Unlike data on a smartphone, this wisdom passes down naturally—albeit not without friction—because everyone recognizes the healthy and mutually beneficial connection between generations. Over time bad ideas, traditions, and modes fall away, replaced by new and better ones. 

Decaying, dysfunctional societies, by contrast, pit generations against each other at the ballot box and otherwise. Politics and government become powerful weapons in an intergenerational cold war. Aging western populations skew the demographic political balance in favor of older people, especially active older voters. Brexit, Trump, and the Scottish independence referendum have now exposed this growing reality. 

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As Housing Prices Fall on West Coast, Even Red Zones Turn Against Trump

11/28/2018Doug French

Donald Trump continues to claim victory, but the blue wave was undeniable on the left coast. You might say, California was already a bunch of lefties. Yeah, except Orange County has always been a Republican stronghold since the days of R.C. Hoiles. In a review of Brian Doherty’s “ Radicals for Capitalism ,” I wrote,

One of the genuine heroes of the movement who the book enlightened me to is R.C. Hoiles. It should have occurred to me sooner that a courageous man was behind a very libertarian daily newspaper being published from the middle of liberal California: the Orange County Register. As Doherty describes, "Orange County became known, to a large degree thanks to Hoiles himself, as 'nut country,' the hotbed of the rightest of the right wing."

"Any time a man has to pay for something he does not want because of the initiating of force by the government, he is, to that degree, a slave," Hoiles wrote. Now that's my kind of guy, and the fact that he owned a newspaper with all the pressures of making advertisers happy to keep the presses running is heroic.

"Hoiles was an earthy and simple man and a notorious union-busting anarchist cuss," writes Doherty, "who'd thrust himself into picket lines surrounding his property to tell the union boys why they were all wet." Just learning about the late Mr. Hoiles is worth the price of the book.

Orange County “nut country” went bluer than blue on election night. Was it Trump’s fault, or maybe the Trump Bump has turned into Trump Dump in west coast housing with voters voting their falling property values.

In the seemingly always red-hot Bay area and Silicon Valley homeowners are rushing to put their homes on the market. Wolf Richter writes ,

So it’s time to unload. Sellers are putting their homes on the market, and active listings in those three counties combined – San Francisco, San Mateo, and Santa Clara, which cover the area from San Jose to San Francisco – surged by 76% in October compared to October last year, to 4,149 listings, according to the National Association of Realtors.

The chart below dramatically illustrates the Bay Area price cutting.

price+cuts1.PNG

The market is no better in Southern California. KTLA 5 News reported at the end of October,

A chill is settling over the once white-hot Southern California housing market.Listings are up. Sales are falling. Price reductions are becoming more common.

The Seattle market also hit the ditch this summer. The number of listings doubled in October, from a year ago, with the number of listings matching the lows of 2012. Price cuts in King County (Seattle and Bellevue) have tripled according to Wolfe Street .

Mr. Richter makes the point that Seattle and San Francisco voters didn’t side with Trump in 2016, “But when it comes to home prices in these liberal bastions, the ‘Trump effect’ made property owners a ton of money – if they’re able to get out in time.”

If they are not out by now, they may have waited too long.

king+county.PNG
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The Coming Bankruptcy of the American Empire

11/21/2018Hunter DeRensis

The chickens are coming home to roost. It’s only a question of when.

Herbert Stein was chair of the Council of Economic Advisors under Presidents Richard Nixon and Gerald Ford and is the father of the more well known Ben Stein. In 1976, he propounded what he called “Stein’s Law”: if something cannot go on forever, it will stop. Stein was referring to economic trends, but the same law applies just as much to foreign policy and the concept of empire.

Stein’s Law at first glance might seem like a banal platitude. But we should be fully cognizant of its implications: an unsustainable system must have an end. The American empire is internally flawed, a fact that anti-imperialists both left and right should appreciate.

The United States’ national debt is approaching $22 trillion with a current federal budget deficit of over $800 billion. As Senator Rand Paul often points out, bankruptcy is the Sword of Damocles hanging perilously close to Uncle Sam’s neck. Outside of a handful of libertarian gadflies in Congress such as Paul, there is no serious political movement to curb the country’s wayward spending. It would take some upset of multiple times greater magnitude than Donald Trump’s 2016 victory to alter this course.

The United States holds the most debt of any country in the history of the world. In fairness, when our debt-to-GDP ratio is factored in, there are many countries in far more perilous economic situations than the U.S. But there will come a tipping point. How much debt can the system hold? When will the cracks grow too big to hide? When will the foundation crumble? There’s a great deal of ruin in a nation, said Adam Smith, and our ruin must ultimately come.

Is bankruptcy possible? As some Beltway economists remind us, no. Technically the government has the power to artificially create as many dollars as it needs to pay its debts. But this kind of hyper-inflation would deprive the U.S. dollar of any value and tank the global economy that trades with it. Simple failure to pay back our debt might even be a better scenario than such an inflationary hellscape.

When the world loses confidence in the American government’s ability to pay its debt, or the interest rate on our debt becomes unsustainably high, choices will have to be made. No more kicking the can down the road, no more 10-year projections to balance the budget. Congress, in a state of emergency, will have to take a buzzsaw to appropriations. And the empire will be the first thing to go.

Just like its warfare state, the government’s welfare state has plenty of internal calamities. But while it might be the preference of some megalomaniacal globalists to let the proles starve while preserving overseas holdings, it’s not going to happen. What would transpire if Social Security checks stopped showing up in mailboxes and Medicare benefits got cut off? When presented with that choice, will the average American choose his social safety net or continued funding for far-flung bases in Stuttgart, Okinawa, and Djibouti? Even the most militaristic congressperson will know which way to vote, lest they find a mob waiting outside their D.C. castles.

Neoconservatives constantly harp on the danger of vacuums. Without a U.S. presence, the logic goes, more sinister forces will take over. What happens when American troops must be evacuated from all over the world because we can’t afford to keep them there anymore? There’s no debate, no weighing of options, and no choice. If the money isn’t there, the money isn’t there. Nothing could tie the hands of America’s military more than a debt crisis. And if one happens, it will be in part because those same neoconservative intellectuals preached a multi-trillion-dollar global war to remake humanity in our image. Hubris leads to downfall.

This is the kind of danger that Rand Paul and others warn about. Not only are our undeclared wars illegal, counterintuitive, and destabilizing to foreign regions, they’re financially destabilizing for us as well.

A radical reexamination of America’s overseas assets and obligations must take place. Ideologically motivated wars have led us to the precipice of financial disaster. American foreign policy must adopt a limited, highly strategic view of its national interest and use its remaining wealth sparingly and only when necessary. Realism can stave off national ruin. Close bases in Germany and bring the money home, instead of forcing the troops to evacuate in the dead of night after it’s too late. Enter negotiations with the Taliban and have a planned withdrawal from Afghanistan, lest it end with helicopters fleeing Kabul like they did Saigon. Make the hard choices before circumstances make them for you.

Our leaders ignore Stein’s Law at their own peril. No matter what, U.S. troops are coming home. Better it be our decision than our debt collectors.

This article appeared earlier at The American Conservative.

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US Ranks 13th in UN's Latest Human Development Index

11/21/2018Ryan McMaken

Last month, the United Nations released its Human Development Index , which is a report that attempts to quantify the quality of life in world's nations in a way that looks beyond purely economic measures. According to the report:

The underlying principle of the HDI, considered pathbreaking in 1990, was elegantly simple: National development should be measured not only by income per capita, as had long been the practice, but also by health and education achievements.

Ranking countries by their HDI value trans- formed the development discourse and dethroned income per capita as the sole indicator of development progress. 

The Economist sums up the method in more detail:

The index combines four simple measures: life-expectancy at birth; gross national income per person; average years of education; and expected years of school. First, each variable is normalised on a scale of zero to one; next, the two education variables are averaged; and finally, the index is calculated as the geometric mean of its three components.

In other words, the index is an attempt to answer the often-hard criticism that there's more to life than measures if income.

Of course, there's also more to life than aggregated numbers on life expectancy, education, and income, as well.

And, as Daniel Mitchell has often noted, these sorts of ranking schemes created by organizations like the UN and the OECD tend to be created in a way that looks good to the international bureaucrats who create them. And needless to say, these people aren't exactly known for a dogmatic preference for laissez-faire.

Nevertheless, if viewed with the proper skepticism, HDI is an interesting look into what UN researchers think is important, and how different countries stack up in this particular case.

When we list the top 30 countries ranked in terms of HDI, we find Norway at the top, Estonia at the bottom, and the United States close to the middle:

The only Western European countries that don't make the top 30 are Portugal and Andorra which are ranked at 41 and 35, respectively. Greece, which is an EU country, and traditionally considered to be part of "the West" is ranked at 31.

If we were to extend the list to the top fifty, we would also see Poland, Latvia, Chile, Hungary, Argentina, Croatia, and Russia, among others.

Where Does the United States Rank?

From what I can find, not a single major news outlet other than The Economist has commented on the new report. This may be in part due to the fact that the rankings don't lend themselves to any snappy observations about how the report "proves" that the United States is gravely deficient in some sort of quality-of-life indicator, and that all the US's problems will be solved if only it embraces more government intervention.

It is no doubt disappointing then, that the United States is not especially remarkable in the HDI. It ranks 13th between Canada and the United Kingdom. The US is two notches below Denmark and two notches above Finland.

France, Spain, and Italy, however, rank remarkably low, coming in at 24th, 26th, and 28th respectively.

It's conceivable, of course, that believers in the myth of the Scandinavian socialist utopia might point to this as further "evidence" that more interventionist states are "better off" than the supposed hyper-capitalist United States.

This supposition fails, of course, because the United States is not especially capitalist, nor is Scandinavia especially socialist.

Moreover, if having a highly interventionist state is the prescription for success, why do countries like Italy, Spain, and France rank so far below the United States? Those countries all have enormous welfare states and profligate government spending. Indeed, if the Scandinavia is our model, why does the US rank above Finland, and barely below Denmark? After all, the US's HDI value is 99%the size of Denmark's. There's really not much of a difference here between the US and the supposed promised lands of northern Europe.

"Adjusting" for Inequality

If you have a habit of reading reports like this, though, you can probably guess where this is headed.

The UN's own report points toward a very high level of quality of life in the US both in terms of education, life expectancy, and income.

However, as has become popular now among agencies like the UN, the report must be "adjusted" for inequality.

(If you're interested in how they do this, see here .)

The US is quite large and diverse (in terms of geography demographics, and more) compared to every other country with a "very high HDI." Not surprisingly, then, we find more diversity in the US than elsewhere.

The UN researchers then "adjust" for this by discounting the US's HDI score in accordance with its inequality level.

Thus, the US HDI value falls from .92 down to .79. Now, rather than being near the top, this puts the USA much farther down the list near France (.80), Hong Kong (.80), Israel (.78), and South Korea (.77).

Now, instead of being ranked 13th, the US is ranked 24th.

Of course at this point, we're reaching labyrinth-like levels of aggregation and adjustment. We've reduced every country to a single number, and then we've adjusted it further to account for inequality.

In spite of this rather improbable method of reducing numerous countries of many millions of people into a single number, rankings like these nevertheless tend to pop up in international lists of "happiest" countries or "the best country to live in."

The US Is Too Big for These Comparisons

The whole endeavor strikes me as rather suspect, especially when dealing with a country as enormous as the United States. After all, the US is, by far, the largest country in the top rankings. With 320 million people, the US isn't really comparable to even the next-biggest "very high HDI" country, which is Germany with 80 million people. Other comparisons are far worse. Norway, for example, has 5 million people, and is thus 1.5% the size of the US.

A far more meaningful ranking system would be to account for differences across political sub-units and regions, such as the US states. As we've already seen in numerous cases, such as with incomes, life expectancy, and crime, variations are quite large across states. Some US states are places where residents enjoy remarkably low crime, low mortality, and high incomes. Other states do less well.

One aggregate number of the entire US actually tells us very little.

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Record European Skyscraper

11/20/2018Mark Thornton

A new record breaking skyscraper for Europe has been completed as the tallest skyscraper in Europe. Under construction for six years, the 87 story building (Lakhta Center) in St. Petersburg will become the headquarters of Russia's natural gas giant and its oil subsidiary, Gazprom. The building will not be finished on the interior and open to the public until next year.

This sets the stage for the Skyscraper Curse.

The STOXX European 600 Index, which consists of a variety of stocks from European stock markets is down 9% since September 27, about when the record was broken. HT: RB

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The Federal Government Can't Centrally Plan Immigration Any More than It Can Centrally Plan Society

11/20/2018Zachary Yost

Immigration has featured prominently in the news ever since Donald Trump first announced his presidential candidacy and inveighed against Mexican immigrants and the crime they supposedly brought with them.

However, with the recent revelation that the federal government has separated over 2,300 children from their parents, immigration has again dominated the news, and with good reason: these actions were arbitrarily cruel and unnecessary.

Reasonable people can disagree about immigration policy, and the issue as a whole is not as simple as either side would like to portray. Specifically, concerns about the impact of immigration on American culture are often not given enough consideration by many people in favor of a more open immigration system.

However, conservatives favoring restrictions because of concerns about cultural change must then explain why they are willing to abandon core conservative principles like voluntary community, and why they believe that the U.S. government should centrally plan the culture of our society.

One of the core conservative insights stressed by both Edmund Burke and Friedrich Hayek is, in the words of political theorist Linda Raeder, that “social order appears as a product of the interplay of historically evolved institutions, habit and custom, objective law, and impersonal social forces.” In their time, both Burke and Hayek opposed efforts to reengineer society through central planning, whether by French Jacobins, Russian communists, or American and European democratic socialists, precisely because such efforts necessarily suffered from an inability to take into account the vast amount of local knowledge required for successful planning.

Hayek called this the knowledge problem, and wrote that

this is not a dispute about whether planning is to be done or not. It is a dispute as to whether planning is to be done centrally, by one authority for the whole economic system, or is to be divided among many individuals.

A core component of conservatism is the rejection of central planning. As conservative luminary Russell Kirk’s eighth principle of conservatism says “conservatives uphold voluntary community, quite as they oppose involuntary collectivism.” Conservatives, especially those concerned with the cultural effects of immigration, should explore and embrace ways of decentralizing the power of immigration away from the federal government to the state, or, even more ideally, the county level.

With over 320 million people in the U.S., it is nonsensical to think that one uniform immigration policy is sufficient to address the circumstances and needs of everyone in every place. Decentralizing the issue allows for every state to experiment to see what works best for them.

While such a radical idea may seem untenable in our current political climate, it is not infeasible in the long run, and it provides a ripe opportunity for conservative scholarship on the issue on many fronts.

On the judicial front, some legal scholars contest the idea that the federal government even has any legitimate authority over immigration at all. This is a view, which, if widely adopted, would certainly make implementing plans for decentralization much easier. Fox News’ Andrew Napolitano, the network’s senior judicial analyst, has said that “the Constitution itself — from which all federal powers derive — does not delegate to the federal government power over immigration, only over naturalization.”

Similarly, George Mason law professor Ilya Somin has argued that “the Naturalization Clause does not create a power to prevent foreigners from entering the country. It merely allows Congress to set conditions for the grant of citizenship.” Elsewhere he has contested the idea that Article I, Section 8, Clause 10 of the Constitution permits federal regulation of immigration under the auspices of the concept of The Laws of Nations. While such views are not currently widespread, merely discussing them helps to move the ball forward.

On the level of practical implementation, the Cato Institute has a white paper exploring the possibility of establishing a state-based visa system modeled on similar systems currently in place in both Canada and Australia. The proposed system would have the benefit of allowing labor to flow into those parts of the countries where it is needed and kept away from parts without a labor shortage or that don’t desire immigrants, as well as allowing for states to implement their own policies concerning welfare eligibility. This system would also create incentives so that immigrants stay in their sponsoring states by making it part of their legal residency requirements, which would alleviate fears that immigrants in New York would immediately start to flood into Pennsylvania, or vice versa.

It is my own view that some kind of sponsorship system, in which citizens post a bond or surety and are liable for the good conduct of the immigrants they sponsor, is a good way of aligning incentives for all parties concerned. As writer Chris Calton has pointed out , blanket immigration restrictions not only affect foreigners, but also affect American citizens who wish to interact in both economic and social ways with these potential immigrants. If people want more immigrants, then it makes sense that they should be willing to internalize any potential externalities, whether it be potential welfare dependence or crime.

Such an incentive structure offers a compromise between those who are enthusiastic about immigration and those opposed. Sponsorship programs in one form or another have been suggested by people across the political spectrum, such as Matthew La Corte and David Bier at the Niskanen Center, law professor Eric Posner and economist Glen Weyl , and Arc contributor and Mises Institute writer Tho Bishop .

Developing a decentralized framework should be a starting point for any view of immigration policy that takes essential conservative views about the fundamental nature of society seriously. Any true conservative would be up in arms over the idea that the government can somehow centrally plan widget production, yet many are willing to cede the idea that the government can somehow successfully centrally plan the makeup of society itself, which is much more complex than any industry.

It is time to take conservative principles seriously and begin the development of a truly decentralized approach to immigration.

Originally published by Arc Digital.

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Jeff Deist on the Accad and Koka Healthcare Podcast

11/19/2018The Editors

The Accad and Koka Report, hosted by two MDs, focuses on free-market approaches to medicine and health.

Drs. Michel Accad and Anish Koka recently hosted Mises Institute president Jeff Deist for a no-holds barred look at how Congress, the medical establishment, and lobbyists work together to make healthcare anything but free. Watch the interview here.

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