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	<title>Cafe Hayek</title>
	
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	<description>where orders emerge</description>
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		<title>Says it all</title>
		<link>http://cafehayek.com/2010/03/says-it-all.html</link>
		<comments>http://cafehayek.com/2010/03/says-it-all.html#comments</comments>
		<pubDate>Wed, 17 Mar 2010 04:51:25 +0000</pubDate>
		<dc:creator>Russ Roberts</dc:creator>
				<category><![CDATA[Web/Tech]]></category>
		<category><![CDATA[What's wrong with the country]]></category>

		<guid isPermaLink="false">http://cafehayek.com/?p=8775</guid>
		<description><![CDATA[Here&#8217;s an amazing story from CNN because it&#8217;s so ordinary. It&#8217;s about a top-down govenrment initiative that sounds good&#8211;giving more broadband access to Americans. Who&#8217;s against more Americans getting broadband? The FCC has a plan to get it done. Go Broadband!
So here&#8217;s the story. (HT: Best of the Web)
Like a photographer without a camera, or [...]]]></description>
			<content:encoded><![CDATA[<p></p><p>Here&#8217;s an amazing <a href="http://www.cnn.com/2010/TECH/03/16/life.without.broadband/index.html?hpt=C1">story from CNN</a> because it&#8217;s so ordinary. It&#8217;s about a top-down govenrment initiative that sounds good&#8211;giving more broadband access to Americans. Who&#8217;s against more Americans getting broadband? The FCC has a plan to get it done. Go Broadband!</p>
<p>So here&#8217;s the story. (HT: <a href="http://online.wsj.com/article/best_of_the_web_today.html">Best of the Web</a>)</p>
<blockquote><p>Like a photographer without a camera, or a mechanic who doesn&#8217;t own a car, Kelli Fields is a webmaster without high-speed Internet access.</p>
<p>By day, the 42-year-old uses a broadband connection at work to update a university&#8217;s Web site, which she built and codes from scratch.</p>
<p>But when she goes home at night, the rural Oklahoman struggles with a dial-up Internet connection so slow, she does chores to pass the time while Web sites load. Her high school-age son is so fed up with the glacial pace of their Internet connection that he asks his mom to update his Facebook page from the office.</p></blockquote>
<p>That sounds frustrating. But is this a serious social problem the government needs to fix?</p>
<blockquote><p>&#8220;It&#8217;s pretty sad that he has to ask me to accept his friends when I get to work,&#8221; said Fields, who rarely uses the home computer for anything but word processing.</p>
<p>On Tuesday, the U.S. Federal Communications commission will unveil its much-awaited &#8220;broadband plan,&#8221; which, among other things, will explain how the government plans to get <a href="http://reboot.fcc.gov/blog?entryId=172819" target="new">nine out of 10 Americans online by 2020</a>. That&#8217;s no easy task, considering less than two-thirds of people in the country have high-speed Internet access at home today, according to a 5,005-person survey <a href="http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-296442A1.pdf" target="new">published by the FCC in February</a> (PDF).</p>
<p>The Obama administration&#8217;s 2009 American Recovery and Reinvestment Act has <a href="http://www.whitehouse.gov/issues/technology" target="new">put $7.2 billion toward high-speed Internet expansion</a> and has required the FCC to develop a broadband plan.</p>
<p>Taking a personal look at unwired America, however, reveals just how complicated getting people online can be. That&#8217;s partly because there are so many reasons people still don&#8217;t have high-speed Internet access at home.</p></blockquote>
<p>I&#8217;m sure it&#8217;s complicated but somehow, almost 2/3 of the American people have managed it. And it must be tough in rural Oklahoma to get broadband so no wonder this story illustrates the need for a national broadband effort, right?</p>
<blockquote><p>Some, like Fields, don&#8217;t have money for the connections, or they live in parts of the country where broadband hookups are not available. Fields lives outside of Catoosa, Oklahoma. Neighbors less than a mile away have high-speed Internet access, but the fiber-optic cables that connect homes and apartments to the high-speed Web haven&#8217;t reached her house.</p></blockquote>
<p>Yes, it would be nice to get broadband via a fiber optic cable. And so close. Less than a mile away. Is there another way to get broadband? Yes there is:</p>
<blockquote><p>She could install a satellite and connect to the high-speed Internet, but the installation fee is $300, and she said she can&#8217;t afford that right now. She&#8217;s been waiting for wired broadband to come to her home for five years, and she holds out some hope that the network will get to her eventually.</p></blockquote>
<p>She&#8217;s awfully patient. And poor, I guess. For a mere $300 she can make her son happy and she can have broadband for herself. But she doesn&#8217;t have the money. Keep reading:</p>
<blockquote><p>About 4 percent to 5 percent of American households similarly are in places that aren&#8217;t reached by broadband cables. And 36 percent of the unwired population cites cost as the main reason for not connecting to the Web, according to the FCC survey.</p>
<p>Other unwired people are afraid of the Internet, or they simply don&#8217;t understand why it might be important to bring broadband into their lives.</p></blockquote>
<p>Cue the violins:</p>
<blockquote><p>Florence Pearson, a 62-year-old from New York City, said she was afraid of computers. If she touched one, she thought she would break it. &#8220;I was embarrassed, not knowing anything at all about computers and not having an e-mail address,&#8221; she said during a <a href="http://www.youtube.com/fccdotgovvideo#p/u/7/-1h6qux4A3U" target="new">presentation at an FCC event last week</a>.</p></blockquote>
<p>Wish I&#8217;d have been there. Dogs and ponies everywhere.</p>
<blockquote><p>&#8220;I knew I was missing out on so much, but I could not get over this fear.&#8221;</p>
<p>Pearson&#8217;s daughter convinced her to take a computer class, she said, and that helped her realize that she could work more efficiently with the help of computers and the Internet.</p>
<p>&#8220;It was like an entirely new world for me,&#8221; she said at the event.</p></blockquote>
<p>OK. Her daughter took care of her. So why do we need a national program?</p>
<blockquote><p>It will take more than an improved broadband infrastructure to get people who aren&#8217;t familiar with computers to go online, said John Horrigan, director of consumer research at the FCC. The federal government on Tuesday will propose programs to help educate people about the Internet and increase Web access in public libraries, he said, but he cautioned that none of those will be a quick fix.</p>
<p>&#8220;Nonadoption [of broadband] is not the kind of problem that lends itself to overnight solutions,&#8221; he said, &#8220;because you&#8217;re trying to train people. You&#8217;re trying to get them to change their behavior.&#8221;</p>
<p>In the recent FCC survey, which Horrigan authored, 22 percent of people without broadband access said fears of the Internet and a lack of understanding of computers were the main reasons they didn&#8217;t have broadband at home. Nineteen percent said they viewed the Internet as a &#8220;waste of time&#8221; or didn&#8217;t see its relevance to their lives.</p>
<p>And a 2009 survey, <a href="http://www.pewinternet.org/Reports/2009/10-Home-Broadband-Adoption-2009.aspx?r=1" target="new">from the Pew Internet &amp; American Life Project</a>, found the majority of Americans who don&#8217;t have broadband at home don&#8217;t want it.</p>
<p>But broadband is becoming essential for modern life, Horrigan said.</p></blockquote>
<p>Ah, he knows best. Some people think the internet is a waste of time or not worth the money. We&#8217;ll give it to them anyway.</p>
<blockquote><p>Many job applications, for instance, are not available on paper anymore. And health records and information are increasingly moving online. Those who don&#8217;t have access are at increasing risk of being left behind.</p>
<p>&#8220;Giving its growing importance as a necessity, that creates an even more isolating effect for those who are offline,&#8221; he said.<strong> </strong></p>
<p>The FCC&#8217;s chairman, Julius Genachowski, <a href="http://reboot.fcc.gov/blog?entryId=172819" target="new">has written online</a> that the nation&#8217;s broadband plan will include programs aimed at &#8220;making sure that every child in America is digitally literate by the time he or she leaves high school.&#8221; The idea is to teach kids why they need the Internet.</p></blockquote>
<p>Funny, I just have a feeling kids are pretty on top of that one. But let&#8217;s get an ad campaign going.</p>
<blockquote><p>At first, it may be easy to write off Fields&#8217; situation in Oklahoma as insignificant because she does have dial-up Internet access at home.</p></blockquote>
<p>Oh, right, she does have internet. It&#8217;s just slow. That&#8217;s like so 1996.</p>
<blockquote><p>But the speed difference between dial-up connections, which use telephone wires to transmit signals, and those that travel through fiber-optic broadband cables is significant, Horrigan said.</p>
<p>That&#8217;s because the Web is increasingly designed for broadband connections. Photos and videos are everywhere. So are Flash animations. The result is that dial-up connections have actually gotten slower over time, according to Horrigan.</p>
<p>&#8220;If you were a contented dial-up user five years ago because you liked to check e-mail and get some headlines, that&#8217;s probably a slower process today, given that sites are optimized for broadband,&#8221; he said.</p>
<p>Fields says her slow connection at home is particularly a problem for her kids, who need fast Web connections to keep up in school.</p>
<p>Her daughter, for example, sends text messages to her mom while she&#8217;s in the office, asking her to conduct Google searches that she&#8217;s required to complete for her homework.</p></blockquote>
<p>Get it? It&#8217;s for the children. Those poor kids aren&#8217;t going to get a good education. The next thing you know, the Chinese are going to pass us. Gotta have a broadband plan. Top-down, baby. For the children! We&#8217;ve got to keep America competitive!</p>
<blockquote><p>The slow connection may affect family finances. Fields said she has turned down Web development projects because she simply couldn&#8217;t do them from home.</p>
<p>&#8220;It would just take me forever,&#8221; she said.</p></blockquote>
<p>We need broadband to keep America prosperous!</p>
<blockquote><p>Her dial-up connection also has caused some issues with her current job as the webmaster for Rogers State University, in Claremore, Oklahoma.</p>
<p>When classes are canceled because of bad weather, for instance, Fields has to ask another employee to update the Web site to tell students not to come to class. She can&#8217;t do so from home.</p>
<p>&#8220;It is ironic,&#8221; she said of the fact that she&#8217;s a Web site manager who doesn&#8217;t have high-speed Web access. &#8220;It&#8217;s very strange, and people like you are like, &#8216;What? I don&#8217;t understand?&#8217; They kind of laugh at it.&#8221;</p>
<p>Fields is considering scraping together the money to get satellite Internet at her house.</p></blockquote>
<p>It does seem like a good idea. Her job is suffering, she&#8217;s losing money, and her kid is falling behind in school. But I guess she just can&#8217;t afford it. Who wouldn&#8217;t want to help her?</p>
<blockquote><p>But she doesn&#8217;t want to give up services like TV to free up money for an expensive Internet connection.</p></blockquote>
<p>We&#8217;re about 1000 words into the article at this point. There really is not story here. And no national crisis. Evidently Kelli Fields thinks TV is more important than broadband. Evidently watching TV is more important than doing her job well, finding outside income opportunities and keeping her kid current with homework. Or maybe, just maybe, the hardship of a life without broadband is being exaggerated for the story. And the country.</p>
<p>The weirdest thing is that if we really think this is a problem we don&#8217;t need a national plan. We could just subsidize rural folks purchases of satellites. But that wouldn&#8217;t help <a href="http://www.econlib.org/library/Columns/y2007/Robertspolitics.html">whoever the bootleggers are</a> in the national plan.</p>
<p>The story concludes:</p>
<blockquote><p>She realizes that without broadband, her family is missing out on a lot.</p>
<p>&#8220;It really has just become a way of life, like you have to be connected all the time,&#8221; she said. &#8220;And I don&#8217;t feel that need to be connected through Facebook or news stories. I don&#8217;t feel that need to be connected all the time, but when I need [Internet access,] it would be nice to have it.&#8221;</p></blockquote>
<p>Yes it would be nice. It&#8217;s especially nice when someone else pays for it. Government thrives by handing out free lunches. The problem is that the bills keep coming and we don&#8217;t have enough money to give out all that free food. Someone needs to make choices and trade0ffs. Kelli Fields made her choice. Maybe that tells us something about the relative urgency of the problem.</p>
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		<slash:comments>102</slash:comments>
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		<title>Subsidies and Distortions</title>
		<link>http://cafehayek.com/2010/03/subsidies-and-distortions.html</link>
		<comments>http://cafehayek.com/2010/03/subsidies-and-distortions.html#comments</comments>
		<pubDate>Tue, 16 Mar 2010 21:18:25 +0000</pubDate>
		<dc:creator>Don Boudreaux</dc:creator>
				<category><![CDATA[Subsidies]]></category>
		<category><![CDATA[The Economy]]></category>
		<category><![CDATA[Trade]]></category>

		<guid isPermaLink="false">http://cafehayek.com/?p=8771</guid>
		<description><![CDATA[Suppose that Bill Gates, Warren Buffett, and Larry Ellison pool their wealth into what they call &#8220;The Subsidy Fund.&#8221;  Out of his fund, the three billionaires will subsidize producers of their choice.
Let&#8217;s imagine that Messrs. Gates, Buffett, and Ellison choose to bestow billions upon Blairex Laboratories, Inc., of Columbus, Indiana.  The three billionaires subsidize Blairex [...]]]></description>
			<content:encoded><![CDATA[<p></p><p>Suppose that Bill Gates, Warren Buffett, and Larry Ellison pool their wealth into what they call &#8220;The Subsidy Fund.&#8221;  Out of his fund, the three billionaires will subsidize producers of their choice.</p>
<p>Let&#8217;s imagine that Messrs. Gates, Buffett, and Ellison choose to bestow billions upon <a href="http://www.buttpaste.com/BLButtPaste.php">Blairex Laboratories, Inc</a>., of Columbus, Indiana.  The three billionaires subsidize Blairex not out of any profit motive but, rather, simply because they want to do so &#8211; it makes them feel good.</p>
<p>Blairex manufactures and distributes over-the-counter medications such as Pertusin cough syrup and Boudreaux&#8217;s Butt-Paste.  (No connection to the co-proprietor of Cafe Hayek.)</p>
<p>With the windfall of billions of dollars from the three billionaires, Blairex is now better able to expand its operations beyond the size that these operations would obtain without the additional billions.  That is, Blairex is able to expand the quantity of output that it exports from its factories to households across America and the world.</p>
<p>In this hypothetical example, do the three billionaires distort the market?  Do they make Americans (or consumers, more generally) poorer?  Does their non-economically motivated subsidy pose a threat to the health of the economy over the long-run?</p>
<p>It&#8217;s very difficult to see how.  Each of these gentlemen made lots of money honestly.  How they choose to spend that money, as long as they do so peacefully, is their business.  They no more distort the market by spending a large chunk of their wealth on subsidies to Blairex than they would distort the market by spending a large chunk of their wealth, say, developing shopping malls or in trying to find a way to turn water into gasoline or on extravagant Tahitian vacations.</p>
<p>The details of market outcomes would certainly be different if the three billionaires chose not to subsidize Blairex, but the details of the economy as they look <em>without</em> a Blairex that enjoys the largese of the three billionaires is no more &#8220;correct&#8221; or &#8220;optimal&#8221; or free of distortions than are the details of the economy as they look with a Blairex that enjoys this largese.</p>
<p>&#8230;.</p>
<p>And, from the perspective of Americans, so it is &#8212; or nearly so &#8212; with non-American-government subsidies to non-American producers.  We Americans cannot control Beijing or of any other national government.  Prudence and practicalities dictate that we treat the economic decisions of other governments as data, as states of the world.</p>
<p>If Beijing subsidizes the consumption by non-Chinese of Chinese-produced goods and services, we non-Chinese benefit.  And this benefit, <em>from our perspective</em> <em>outside of China</em>, is no more a distortion of the market than is the hypothetical billions poured by the three billionaires upon Blairex.</p>
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		<slash:comments>45</slash:comments>
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		<title>Keep Those Exports Coming</title>
		<link>http://cafehayek.com/2010/03/keep-those-exports-coming.html</link>
		<comments>http://cafehayek.com/2010/03/keep-those-exports-coming.html#comments</comments>
		<pubDate>Tue, 16 Mar 2010 20:14:07 +0000</pubDate>
		<dc:creator>Don Boudreaux</dc:creator>
				<category><![CDATA[Competition]]></category>
		<category><![CDATA[Complexity and Emergence]]></category>
		<category><![CDATA[Myths and Fallacies]]></category>
		<category><![CDATA[Trade]]></category>

		<guid isPermaLink="false">http://cafehayek.com/?p=8769</guid>
		<description><![CDATA[Here&#8217;s a letter that I sent to the New York Times &#8211; the third letter in response to yesterday&#8217;s Krugman column:
Paul Krugman notes that Chinese Prime Minister Wen Jiabao &#8220;accused other nations of doing what China actually does, seeking to weaken their currencies &#8216;just for the purposes of increasing their own exports&#8217;&#8221; (&#8220;Taking on China,&#8221; [...]]]></description>
			<content:encoded><![CDATA[<p></p><p>Here&#8217;s a letter that I sent to the <em>New York Times</em> &#8211; the third letter in response to yesterday&#8217;s Krugman column:</p>
<blockquote><p>Paul Krugman notes that Chinese Prime Minister Wen Jiabao &#8220;accused other nations of doing what China actually does, seeking to weaken their currencies &#8216;just for the purposes of increasing their own exports&#8217;&#8221; (&#8220;<a href="http://www.nytimes.com/2010/03/15/opinion/15krugman.html?ref=opinion">Taking on China</a>,&#8221; March 15).  This charge of hypocrisy is likely justified.</p>
<p>Nevertheless, why should we non-Chinese complain about this Chinese policy?  We get more for less.</p>
<p>Does Prof. Krugman complain about companies such as Apple and 3M working diligently &#8220;just for the purposes of increasing their own exports&#8221; &#8211; that is, sales?  Such efforts might or might not prove to be good for these companies, but surely those of us who are simply customers of Apple and 3M (and of their competitors) benefit unambiguously.</p>
<p>Sincerely,<br />
Donald J. Boudreaux</p></blockquote>
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		<title>Hayek in Texas</title>
		<link>http://cafehayek.com/2010/03/hayek-in-texas.html</link>
		<comments>http://cafehayek.com/2010/03/hayek-in-texas.html#comments</comments>
		<pubDate>Tue, 16 Mar 2010 16:23:58 +0000</pubDate>
		<dc:creator>Russ Roberts</dc:creator>
				<category><![CDATA[Education]]></category>
		<category><![CDATA[Uncategorized]]></category>

		<guid isPermaLink="false">http://cafehayek.com/?p=8763</guid>
		<description><![CDATA[Is Hayek an important enough economist to be taught in Texas schools alongside Keynes and Friedman? Justin Wolfers says no. Bill Easterly says yes.
I&#8217;m always happy to spread Hayek&#8217;s name around. But the real question isn&#8217;t whether F. A. is worthy. The real question is why is there a state-wide board making a decision like [...]]]></description>
			<content:encoded><![CDATA[<p></p><p>Is Hayek an important enough economist to be taught in Texas schools alongside Keynes and Friedman? Justin Wolfers <a href="http://freakonomics.blogs.nytimes.com/2010/03/15/hayek-propped-up-by-government-intervention/">says no</a>. Bill Easterly<a href="http://aidwatchers.com/2010/03/defending-my-homeboy-hayek-from-freakonomics/"> says yes</a>.</p>
<p>I&#8217;m always happy to spread Hayek&#8217;s name around. But the real question isn&#8217;t whether F. A. is worthy. The real question is why is there a state-wide board making a decision like this. Of course it&#8217;s going to a political decision instead of the one that&#8217;s best for the students. But maybe just as importantly, it imposes a one-size-fits-all solution. So while I happen to like more Hayek, I&#8217;m sure there are many things I wouldn&#8217;t like about the Texas state schoool decision. But all parents are stuck with the state-wide decisions.</p>
<p>Wolfers thinks Hayek&#8217;s unworthy. I&#8217;m sure there are thousands if not millions of Texas parents who agree. But instead of competition among schools over what children should learn, it&#8217;s a top-down decision. Bad idea.</p>
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		<title>If Technology Were a Country….</title>
		<link>http://cafehayek.com/2010/03/if-technology-were-a-country.html</link>
		<comments>http://cafehayek.com/2010/03/if-technology-were-a-country.html#comments</comments>
		<pubDate>Tue, 16 Mar 2010 12:58:45 +0000</pubDate>
		<dc:creator>Don Boudreaux</dc:creator>
				<category><![CDATA[Complexity and Emergence]]></category>
		<category><![CDATA[Myths and Fallacies]]></category>
		<category><![CDATA[Seen and Unseen]]></category>
		<category><![CDATA[Technology]]></category>
		<category><![CDATA[Trade]]></category>

		<guid isPermaLink="false">http://cafehayek.com/?p=8761</guid>
		<description><![CDATA[Here&#8217;s a letter to the New York Times:
Paul Krugman accuses the Chinese government of harming America by (allegedly) keeping the value of the yuan artificially low (&#8220;Taking on China,&#8221; March 15).  Because a low yuan allows Americans to get more for less from China, Prof. Krugman believes that the resulting reduced demand for American-made products [...]]]></description>
			<content:encoded><![CDATA[<p></p><p>Here&#8217;s a letter to the <em>New York Times</em>:</p>
<blockquote><p>Paul Krugman accuses the Chinese government of harming America by (allegedly) keeping the value of the yuan artificially low (&#8220;<a href="http://www.nytimes.com/2010/03/15/opinion/15krugman.html?ref=opinion">Taking on China</a>,&#8221; March 15).  Because a low yuan allows Americans to get more for less from China, Prof. Krugman believes that the resulting reduced demand for American-made products promotes higher unemployment in the U.S.</p>
<p>Given Prof. Krugman&#8217;s beliefs, he should aim his mighty rhetorical artillery at a phenomenon whose impact on American labor is vastly greater than that of Beijing&#8217;s monetary policy &#8211; namely, applied science.  Applied science &#8211; such as software engineering and industrial R&amp;D &#8211; do far more than any low-priced foreign currency can ever hope to do to destroy American jobs.</p>
<p>If Chinese subsidization of U.S. consumption really is a problem, then labor-saving technologies are also a problem &#8211; but one immeasurably larger and more ominous than undervalued foreign currencies.</p>
<p>Sincerely,<br />
Donald J. Boudreaux</p></blockquote>
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		<title>Easterly on Hayek</title>
		<link>http://cafehayek.com/2010/03/easterly-on-hayek.html</link>
		<comments>http://cafehayek.com/2010/03/easterly-on-hayek.html#comments</comments>
		<pubDate>Tue, 16 Mar 2010 12:20:09 +0000</pubDate>
		<dc:creator>Don Boudreaux</dc:creator>
				<category><![CDATA[History]]></category>
		<category><![CDATA[Hubris and humility]]></category>

		<guid isPermaLink="false">http://cafehayek.com/?p=8759</guid>
		<description><![CDATA[Bill Easterly &#8211; who ranks as not only a superb economist but as one of the finest verbal stylists of the profession &#8211; explains why Hayek&#8217;s works deserve more attention.
]]></description>
			<content:encoded><![CDATA[<p></p><p><a href="http://aidwatchers.com/2010/03/defending-my-homeboy-hayek-from-freakonomics/">Bill Easterly &#8211; who ranks as not only a superb economist but as one of the finest verbal stylists of the profession &#8211; explains why Hayek&#8217;s works deserve more attention</a>.</p>
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		<title>Poorer Is Richer</title>
		<link>http://cafehayek.com/2010/03/poorer-is-richer.html</link>
		<comments>http://cafehayek.com/2010/03/poorer-is-richer.html#comments</comments>
		<pubDate>Tue, 16 Mar 2010 00:24:02 +0000</pubDate>
		<dc:creator>Don Boudreaux</dc:creator>
				<category><![CDATA[Seen and Unseen]]></category>
		<category><![CDATA[Trade]]></category>

		<guid isPermaLink="false">http://cafehayek.com/?p=8757</guid>
		<description><![CDATA[Here&#8217;s a letter that I sent today to the New York Times:
Paul Krugman writes that &#8220;It&#8217;s true that if China dumped its U.S. assets the value of the dollar would fall against other major currencies, such as the euro.  But that would be a good thing for the United States, since it would make our [...]]]></description>
			<content:encoded><![CDATA[<p></p><p>Here&#8217;s a letter that I sent today to the <em>New York Times</em>:</p>
<blockquote><p>Paul Krugman writes that &#8220;It&#8217;s true that if China dumped its U.S. assets the value of the dollar would fall against other major currencies, such as the euro.  But that would be a good thing for the United States, since it would make our goods more competitive&#8221; (&#8220;<a href="http://www.nytimes.com/2010/03/15/opinion/15krugman.html?ref=opinion">Taking On China</a>,&#8221; March 15).</p>
<p>In other words, Prof. Krugman believes that it would be a good thing if Americans&#8217; purchasing power falls along with the value of what we receive in return for what we sell.</p>
<p>To prove to skeptics the brilliance of his economics, Prof. Krugman can personally demonstrate why his plan is so splendid.  He can petition Uncle Sam to do two things: (1) replace half of Prof. Krugman&#8217;s portfolio with Monopoly money, and (2) force Prof. Krugman to reduce his salary and his speaking, writing, and consulting fees by 90 percent.</p>
<p>Prof. Krugman&#8217;s purchasing power would, of course, fall, what with merchants not being very keen on accepting Monopoly money.  But no worries, because Prof. Krugman&#8217;s &#8220;goods&#8221; &#8211; his lectures, his consulting skills, his books, and the like &#8211; would all become more &#8220;competitive.&#8221;  Universities, newspapers, and other institutions that cannot now afford to purchase Mr. Krugman&#8217;s pricey services will, under this plan for his betterment, be better able to do so.</p>
<p>How much wealthier he will be!</p>
<p>Sincerely,<br />
Donald J. Boudreaux</p></blockquote>
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		<title>Don Boudreaux on public choice</title>
		<link>http://cafehayek.com/2010/03/don-boudreaux-on-public-choice.html</link>
		<comments>http://cafehayek.com/2010/03/don-boudreaux-on-public-choice.html#comments</comments>
		<pubDate>Mon, 15 Mar 2010 14:48:11 +0000</pubDate>
		<dc:creator>Russ Roberts</dc:creator>
				<category><![CDATA[Podcast]]></category>
		<category><![CDATA[Politics]]></category>

		<guid isPermaLink="false">http://cafehayek.com/?p=8755</guid>
		<description><![CDATA[In the latest EconTalk, Don talks about his view of the political process. The discussion includes a defense of not voting (though the host of the program does vote from time to time) and a discussion of why politics is not the road to a smaller state.
]]></description>
			<content:encoded><![CDATA[<p></p><p>In the latest EconTalk, <a href="http://www.econtalk.org/archives/2010/03/don_boudreaux_o_3.html">Don talks about his view of the political process</a>. The discussion includes a defense of not voting (though the host of the program does vote from time to time) and a discussion of why politics is not the road to a smaller state.</p>
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		<slash:comments>28</slash:comments>
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		<title>Washington Knows Best</title>
		<link>http://cafehayek.com/2010/03/washington-knows-best.html</link>
		<comments>http://cafehayek.com/2010/03/washington-knows-best.html#comments</comments>
		<pubDate>Mon, 15 Mar 2010 03:23:12 +0000</pubDate>
		<dc:creator>Don Boudreaux</dc:creator>
				<category><![CDATA[Competition]]></category>
		<category><![CDATA[Education]]></category>
		<category><![CDATA[Man of System]]></category>

		<guid isPermaLink="false">http://cafehayek.com/?p=8752</guid>
		<description><![CDATA[Here&#8217;s a letter that I sent to the New York Times:
While applauding government-imposed national standards for schooling, you give no credence to the argument that each set of parents &#8211; rather than government &#8211; is in the best position, and has the strongest incentives, to determine whether or not their children are being educated well [...]]]></description>
			<content:encoded><![CDATA[<p></p><p>Here&#8217;s a letter that I sent to the <em>New York Times</em>:</p>
<blockquote><p>While applauding government-imposed national standards for schooling, you give no credence to the argument that each set of parents &#8211; rather than government &#8211; is in the best position, and has the strongest incentives, to determine whether or not their children are being educated well (&#8220;<a href="http://www.nytimes.com/2010/03/14/opinion/14sun1.html?ref=opinion">National School Standards, at Last</a>,&#8221; March 14).  Indeed, the only persons you mention as being parties interested in the successful education of children are school superintendents, state governors, and members of Congress!</p>
<p>Not a single mention of parents or families &#8211; an omission that&#8217;s more than passing strange.</p>
<p>With genuine school choice, procedures to determine if any school is performing well or poorly would be no more complicated, and every bit as effective, as is the procedure we use today to determine if, say, any particular supermarket is performing well or poorly.  That procedure is competition among private, unsubsidized suppliers for customer dollars.  If consumer choice and competition serve well to maintain the quality of supermarkets (and of restaurants, and churches, and hotels, and&#8230;), then why do you think that tweaking, with national &#8220;standards,&#8221; the subsidized and largely monopolistic government schools that haunt the land today is the best way to transform these dysfunctional institutions into effective ones?</p>
<p>Sincerely,<br />
Donald J. Boudreaux</p></blockquote>
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		<title>A Campaign that I’d Sign-Up For</title>
		<link>http://cafehayek.com/2010/03/a-campaign-that-id-sign-up-for.html</link>
		<comments>http://cafehayek.com/2010/03/a-campaign-that-id-sign-up-for.html#comments</comments>
		<pubDate>Sat, 13 Mar 2010 14:20:29 +0000</pubDate>
		<dc:creator>Don Boudreaux</dc:creator>
				<category><![CDATA[Frenetic Fiddling]]></category>

		<guid isPermaLink="false">http://cafehayek.com/?p=8750</guid>
		<description><![CDATA[Here&#8217;s a letter that I sent to the Boston Globe:
You applaud efforts by the Campaign for a Commercial-Free Childhood to thwart &#8220;Big Business’ attempts to turn [children] into consumers of junk food, junk toys, and junk entertainment&#8221; (&#8220;Bowing to corporate America, Judge Baker center loses face,&#8221; March 13).  While I admire these activists&#8217; zealous concern [...]]]></description>
			<content:encoded><![CDATA[<p></p><p>Here&#8217;s a letter that I sent to the <em>Boston Globe</em>:</p>
<blockquote><p>You applaud efforts by the Campaign for a Commercial-Free Childhood to thwart &#8220;Big Business’ attempts to turn [children] into consumers of junk food, junk toys, and junk entertainment&#8221; (&#8220;<a href="http://www.boston.com/bostonglobe/editorial_opinion/editorials/articles/2010/03/13/bowing_to_corporate_america_judge_baker_center_loses_face/">Bowing to corporate America, Judge Baker center loses face</a>,&#8221; March 13).  While I admire these activists&#8217; zealous concern for children, I think it to be misdirected.</p>
<p>No business &#8211; &#8220;big&#8221; or otherwise &#8211; can, without special privileges from government, force children or parents to do anything.  Disney doesn&#8217;t imprison parents who don&#8217;t let their kids watch the Disney Channel, and Little Debbie doesn&#8217;t pull out a gun to shoot children who turn up their noses at her cupcakes.</p>
<p>So, a far better use of these activists&#8217; energies would be in a Campaign for a Government-Free Childhood.  This campaign would work to protect children from truly harmful exercises of genuine power and judgment-impairing fraud &#8211; such as government schooling, minimum-wage legislation that prices many teenagers out of the labor market, and the obvious scam of each politician boasting the title &#8220;Honorable.&#8221;</p>
<p>Sincerely,<br />
Donald J. Boudreaux</p></blockquote>
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		<slash:comments>42</slash:comments>
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		<title>No Snow Job on Green Jobs</title>
		<link>http://cafehayek.com/2010/03/no-snow-job-on-green-jobs.html</link>
		<comments>http://cafehayek.com/2010/03/no-snow-job-on-green-jobs.html#comments</comments>
		<pubDate>Sat, 13 Mar 2010 13:39:59 +0000</pubDate>
		<dc:creator>Don Boudreaux</dc:creator>
				<category><![CDATA[Cleaned by Capitalism]]></category>
		<category><![CDATA[Complexity and Emergence]]></category>
		<category><![CDATA[Environment]]></category>
		<category><![CDATA[Work]]></category>

		<guid isPermaLink="false">http://cafehayek.com/?p=8748</guid>
		<description><![CDATA[At Economist.com, my friend Andy Morriss debates Van Jones on so-called &#8220;Green Jobs.&#8221;
]]></description>
			<content:encoded><![CDATA[<p></p><p><a href="http://www.economist.com/debate/days/view/478">At Economist.com, my friend Andy Morriss debates Van Jones on so-called &#8220;Green Jobs</a>.&#8221;</p>
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		<slash:comments>9</slash:comments>
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		<title>A Thought Experiment</title>
		<link>http://cafehayek.com/2010/03/a-thought-experiment.html</link>
		<comments>http://cafehayek.com/2010/03/a-thought-experiment.html#comments</comments>
		<pubDate>Fri, 12 Mar 2010 22:01:49 +0000</pubDate>
		<dc:creator>Russ Roberts</dc:creator>
				<category><![CDATA[Politics]]></category>
		<category><![CDATA[Uncategorized]]></category>

		<guid isPermaLink="false">http://cafehayek.com/?p=8745</guid>
		<description><![CDATA[One difference between economists and others is that economists tend to be less impressed by motivation and more impressed by what people actually do. Economists are also less impressed by what people say than by what they do. So they are particularly unimpressed by people who profess to be motivated by the public good, for [...]]]></description>
			<content:encoded><![CDATA[<p></p><p>One difference between economists and others is that economists tend to be less impressed by motivation and more impressed by what people actually do. Economists are also less impressed by what people say than by what they do. So they are particularly unimpressed by people who profess to be motivated by the public good, for example. This is one reason some economists have little inherent sympathy for politicians&#8211;economists are not impressed by people who say they are working to serve the public.</p>
<p>So at one extreme you have non-economists who trust politicians because they say they are serving the public, but who distrust businesses because we know deep down that they really only care about profits. The economist answers that talk is cheap. Politicians are self-interested. So are people in business but because there is more competition in business relative to politics, businesses often do a better job of serving the public than politicians do.</p>
<p>So here is a thought experiment to help you (and me) think about motivation and competition and self-interest.</p>
<p>There is a charity that does wonderful work with terminally ill cancer patients making sure the end of their life has dignity. It helps family and friends of the dying cope with loss. It is a wonderful organization led by a fine woman who lost a child to cancer. This charity is her response to her loss. As the director of the charity, she is a passionate voice of the organization. She raises the money. She sets the tone and the direction of the charity. She thinks big. She hopes one day to open a hospital specializing in innovative treatments.</p>
<p>People find the director inspiring and unforgettable They are glad to give her money. Her board is a collection of wealthy philanthropists, some of whom, like her, have been touched by cancer, but others simply admire her deeply.</p>
<p>As much as people like the charity and its visionary leader, everyone agrees that they could do even better work if they had more money. They could reach more people. Help more people. Do more for them. The current budget of the organization is $10 million.</p>
<p>One of the members of the board is well-connected politically. He finds a way to make sure that the charity no longer has to rely on donations. Instead, it will receive an annual appropriation of $1 billion from the federal government. There is wild celebration at the charity. Their work will finally be unconstrained by the necessity of fund-raising. They will finally be able to do all that they&#8217;ve dreamed of doing, unconstrained by their meager budget of the past.</p>
<p>The annual funding by the government comes with one string attached. The leader of the organization will be no longer be chosen by the board but instead will be elected by a popular vote between two competing candidates each year. After all, the money is coming from the public. So the public should get to decide who leads the organization.</p>
<p>How would the performance of the organization change over time now that the budget is taken care of by the federal government? Would the scope and activities of the organization change? Who would succeed in leading the organization? Would the original director be elected?</p>
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		<slash:comments>52</slash:comments>
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		<title>Pre-existing Nonsense</title>
		<link>http://cafehayek.com/2010/03/pre-existing-nonsense.html</link>
		<comments>http://cafehayek.com/2010/03/pre-existing-nonsense.html#comments</comments>
		<pubDate>Fri, 12 Mar 2010 18:32:59 +0000</pubDate>
		<dc:creator>Don Boudreaux</dc:creator>
				<category><![CDATA[Health]]></category>
		<category><![CDATA[Prices]]></category>
		<category><![CDATA[Reality Is Not Optional]]></category>
		<category><![CDATA[Seen and Unseen]]></category>

		<guid isPermaLink="false">http://cafehayek.com/?p=8742</guid>
		<description><![CDATA[Here&#8217;s a letter that I sent to the New York Times:
Paul Krugman thinks it wrong that health insurers don&#8217;t cover pre-existing conditions (&#8220;Health Reform Myths,&#8221; March 12).  Apparently, he believes that each market participant should ignore the value of what she gets in exchange for what she gives.
I wonder if Prof. Krugman has thought through [...]]]></description>
			<content:encoded><![CDATA[<p></p><p>Here&#8217;s a letter that I sent to the <em>New York Times</em>:</p>
<blockquote><p>Paul Krugman thinks it wrong that health insurers don&#8217;t cover pre-existing conditions (&#8220;<a href="http://www.nytimes.com/2010/03/12/opinion/12krugman.html?ref=opinion">Health Reform Myths</a>,&#8221; March 12).  Apparently, he believes that each market participant should ignore the value of what she gets in exchange for what she gives.</p>
<p>I wonder if Prof. Krugman has thought through the implications of his belief.  I propose a bet to test the soundness of his thinking.  Let&#8217;s flip a coin.  If it lands on its edge, I pay Prof. Krugman $1; if it lands either heads or tails, he pays me $1,000,000.</p>
<p>If he genuinely believes that health-insurers should ignore pre-existing conditions, then surely Prof. Krugman won&#8217;t allow the pre-existing condition of the coin&#8217;s shape to prevent him from accepting my bet.</p>
<p>Sincerely,<br />
Donald J. Boudreaux</p></blockquote>
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		<title>Corporate Welfare Kings</title>
		<link>http://cafehayek.com/2010/03/corporate-welfare-kings.html</link>
		<comments>http://cafehayek.com/2010/03/corporate-welfare-kings.html#comments</comments>
		<pubDate>Thu, 11 Mar 2010 17:56:33 +0000</pubDate>
		<dc:creator>Don Boudreaux</dc:creator>
				<category><![CDATA[Other People's Money]]></category>
		<category><![CDATA[Seen and Unseen]]></category>
		<category><![CDATA[Subsidies]]></category>
		<category><![CDATA[Trade]]></category>

		<guid isPermaLink="false">http://cafehayek.com/?p=8740</guid>
		<description><![CDATA[A headline in today&#8217;s Wall Street Journal reads &#8220;Obama Details Effort to Double Exports Over Five Years.&#8221;
Translation: &#8220;Obama Details Effort to Increase Corporate Welfare Over Five Years.&#8221;
]]></description>
			<content:encoded><![CDATA[<p></p><p>A headline in today&#8217;s <em>Wall Street Journal</em> reads &#8220;<a href="http://online.wsj.com/article/SB10001424052748703625304575115562003101780.html?KEYWORDS=exports+obama">Obama Details Effort to Double Exports Over Five Years</a>.&#8221;</p>
<p>Translation: &#8220;Obama Details Effort to Increase Corporate Welfare Over Five Years.&#8221;</p>
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		<slash:comments>39</slash:comments>
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		<title>Walter Williams on the Census</title>
		<link>http://cafehayek.com/2010/03/walter-williams-on-the-census.html</link>
		<comments>http://cafehayek.com/2010/03/walter-williams-on-the-census.html#comments</comments>
		<pubDate>Thu, 11 Mar 2010 17:52:27 +0000</pubDate>
		<dc:creator>Don Boudreaux</dc:creator>
				<category><![CDATA[Current Affairs]]></category>

		<guid isPermaLink="false">http://cafehayek.com/?p=8738</guid>
		<description><![CDATA[If you scroll down at this link, you&#8217;ll find a video of my colleague Walter Williams discussing the U.S. Census.
]]></description>
			<content:encoded><![CDATA[<p></p><p><a href="http://freedomwatchonfox.com/2010/03/02/03022010-freedom-watch-88-w-john-lott-ilya-shapiro-eric-boiling-walter-williams/101372/">If you scroll down at this link, you&#8217;ll find a video of my colleague Walter Williams discussing the U.S. Census</a>.</p>
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		<title>Unreasonable Reason</title>
		<link>http://cafehayek.com/2010/03/unreasonable-reason.html</link>
		<comments>http://cafehayek.com/2010/03/unreasonable-reason.html#comments</comments>
		<pubDate>Thu, 11 Mar 2010 16:39:05 +0000</pubDate>
		<dc:creator>Don Boudreaux</dc:creator>
				<category><![CDATA[Hubris and humility]]></category>
		<category><![CDATA[Man of System]]></category>
		<category><![CDATA[Seen and Unseen]]></category>

		<guid isPermaLink="false">http://cafehayek.com/?p=8734</guid>
		<description><![CDATA[Here&#8217;s a letter that I sent to the Washington Post:
George Will wisely warns against reason unreasonably applied (&#8220;As a progressive, Obama hews to the Wilsonian tradition,&#8221; March 11).  Pres. Obama and his ilk are guided by an irrational faith that human reason is so potent and encompassing that it permits the Best and the Brightest [...]]]></description>
			<content:encoded><![CDATA[<p></p><p>Here&#8217;s a letter that I sent to the <em>Washington Post</em>:</p>
<blockquote><p>George Will wisely warns against reason unreasonably applied (&#8220;<a href="http://www.washingtonpost.com/wp-dyn/content/article/2010/03/10/AR2010031002638.html">As a progressive, Obama hews to the Wilsonian tradition</a>,&#8221; March 11).  Pres. Obama and his ilk are guided by an irrational faith that human reason is so potent and encompassing that it permits the Best and the Brightest to consciously design society, or at least to successfully rearrange significant parts of society (such as the health-care industry).</p>
<p>This hubris is dangerous.</p>
<p>F.A. Hayek, defending reason reasonably applied, wrote more than 60 years ago that &#8220;the fundamental attitude of true individualism is one of humility toward the processes by which mankind has achieved things which have not been designed or understood by any individual and are indeed greater than individual minds.  The great question at this moment is whether man&#8217;s mind will be allowed to continue to grow as part of this process or whether human reason is to place itself in chains of its own making.  What individualism teaches us is that society is greater than the individual only in so far as it is free.  In so far as it is controlled or directed, it is limited to the powers of the individual minds which control or direct it.  If the presumption of the modern mind, which will not respect anything that is not consciously controlled by individual reason, does not learn in time where to stop, we may, as Edmund Burke warned us, &#8216;be well assured that everything about us will dwindle by degrees, until at length our concerns are shrunk to the dimensions of our minds.&#8217;&#8221;*</p>
<p>Sincerely,<br />
Donald J. Boudreaux</p>
<p>* <a href="http://www.econlib.org/library/Enc/bios/Hayek.html">F.A. Hayek</a>, &#8220;<a href="http://74.125.47.132/search?q=cache:jS5RnmUr_N0J:mx.nthu.edu.tw/~cshwang/political-economy/econ5171-2005-Austrian/3Individualism/Hayek%3DIndividualism-TF.pdf+Hayek+Burke+%22individualism%22+true+false&amp;cd=7&amp;hl=en&amp;ct=clnk&amp;gl=us">Individualism: True and False</a>,&#8221; Chapter 1 of Hayek, <em><a href="http://www.amazon.com/exec/obidos/ASIN/0226320936/ref=nosim/thefriedrhayeksc">Individualism and Economic Order</a></em> (U. Chicago Press, 1948).</p></blockquote>
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		<title>Measuring stimulus</title>
		<link>http://cafehayek.com/2010/03/measuring-stimulus.html</link>
		<comments>http://cafehayek.com/2010/03/measuring-stimulus.html#comments</comments>
		<pubDate>Wed, 10 Mar 2010 15:44:58 +0000</pubDate>
		<dc:creator>Russ Roberts</dc:creator>
				<category><![CDATA[Stimulus]]></category>

		<guid isPermaLink="false">http://cafehayek.com/?p=8730</guid>
		<description><![CDATA[In this post, I disagreed with Menzie Chinn and argued that CBO estimates of the impactof the stimulus are not estimates. Charles Steele writes in a comment:
CBO&#8217;s approach *is* an analysis of what stimulus actually did; such analysis necessarily requires a counterfactual, based on an underlying model of what would have happened otherwise.
So while we [...]]]></description>
			<content:encoded><![CDATA[<p></p><p>In <a href="http://cafehayek.com/2010/03/cbo-estimates.html">this post</a>, I disagreed with Menzie Chinn and argued that CBO estimates of the impactof the stimulus are not estimates. Charles Steele writes in a comment:</p>
<blockquote><p>CBO&#8217;s approach *is* an analysis of what stimulus actually did; such analysis necessarily requires a counterfactual, based on an underlying model of what would have happened otherwise.</p>
<p>So while we might disagree with the neoKeynesian underpinnings, this is an argument about the best macro model. So&#8230; what&#8217;s your alternative model? And could you suggest an alternative approach to gauging the effects of stimulus?</p></blockquote>
<p>I would start by saying that I&#8217;m not sure we <strong>can</strong> gauge the effects of the stimulus. It&#8217;s possible that is not measurable. Given that the range of multipliers in the profession these days is from .4 t0 1.5 (at least), it is clear that there is no consensus as to how to predict the impact of the stimulus.</p>
<p>That brings me to my second point that seems to be difficult to make clear. The CBO estimates are not estimates. They are forecasts based on previous estimates. They are akin to a golfer who is 150 yards from the flag and asks his caddy for advice on what club to use. The caddy knows that in the past, the golfer has averaged about 150 yards with a 7-iron, so he takes one out of the bag and hands it to the golfer. The golfer swings. He can&#8217;t see the green—it&#8217;s obscured by trees. The golfer asks the caddy to estimate how far his shot landed from the hole. If the caddy replies that he estimates without looking that the ball is surely within a few feet of the hole because the average 7 iron goes 150 yards when this golfer uses a 7-iron, you don&#8217;t call that an estimate. It&#8217;s a hope. An expectation. And it might be true. But it&#8217;s not an estimate. No caddy would say such a thing. He would wait till he could see where the ball actually ended up.</p>
<p>Surely where the ball goes depends on the execution of this particular swing. The wind. The humidity. How much sleep the golfer got the night before. And so on. Doesn&#8217;t the impact of ARRA depend on how it&#8217;s structured, who gets the money, the mood of the country, the expectations of increases in future taxes and so on? Yes, these things are hard to measure. So is the mood of the golfer and the angle of club as it strikes the ball. But that&#8217;s why the caddy looks and sees where the ball is. Even if the stroke appears to  be well-executed, his ex ante prediction of 150 yards can be way off. That&#8217;s why he looks.</p>
<p>In economics, we can&#8217;t look. We can&#8217;t say that because unemployment remains high the stimulus failed. We can&#8217;t say that because GDP grew a lot, the stimulus was a success. We understand there is other stuff going on. But if we can&#8217;t control for that stuff, then how can we know (or even estimate reliably) the effect of the stimulus?</p>
<p>I argue this is partcularly true if one caddy says that this golfer usually hits a 7-iron 40 yars while another, says no, no, no&#8211;it&#8217;s usually 156 yards.</p>
<p>I argue this is particularly true when <a href="http://cafehayek.com/2010/02/the-great-stimulus-hoax.html">the CBO says</a>:</p>
<blockquote><p>Economic output and employment in the spring and summer of 2009 were lower than CBO had projected at the beginning of the year. But in CBO’s judgment, that outcome reflects greater-than-projected weakness in the underlying economy rather than lower-than-expected effects of ARRA.</p></blockquote>
<p>The phrase &#8220;CBO&#8217;s judgment&#8221; means &#8220;we don&#8217;t know.&#8221;</p>
<p>BTW, Menzie Chinn <a href="http://www.econbrowser.com/archives/2010/03/aspirin.html">reasonably disagrees</a> (see the his comment in the comments section as well) with me about whether there is a consensus in the profession over the efficacy of deficit-financed government spending being successful in fighting recessions. He might be right. I don&#8217;t think so. But I am happy to be find out otherwise. I&#8217;d like to see the paper or papers that established this consensus or the studies that generated the multipliers that were used by the CBO and the consensus around them. I also want to know in particular the paper that justified the multiplier of 1.56 that Jared Bernstein and Christina Romer used in their forecast of the effects of the stimulus package.</p>
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		<title>They Just Don’t Work in Practice</title>
		<link>http://cafehayek.com/2010/03/they-just-dont-work-in-practice.html</link>
		<comments>http://cafehayek.com/2010/03/they-just-dont-work-in-practice.html#comments</comments>
		<pubDate>Wed, 10 Mar 2010 15:19:48 +0000</pubDate>
		<dc:creator>Don Boudreaux</dc:creator>
				<category><![CDATA[Frenetic Fiddling]]></category>
		<category><![CDATA[History]]></category>
		<category><![CDATA[Hubris and humility]]></category>
		<category><![CDATA[Monetary Policy]]></category>
		<category><![CDATA[Reality Is Not Optional]]></category>

		<guid isPermaLink="false">http://cafehayek.com/?p=8731</guid>
		<description><![CDATA[Here&#8217;s the abstract of George Selgin&#8217;s excellent new article, &#8220;Central Banks as Sources of Financial Instability,&#8221; published  in The Independent Review:
The present financial crisis shows how central banks can fuel the financial booms that make severe busts possible. Unfortunately, theoretical discussions of central banking badly neglect its role in fostering financial instability, in part because [...]]]></description>
			<content:encoded><![CDATA[<p></p><p>Here&#8217;s the abstract of <a href="http://www.independent.org/publications/tir/article.asp?a=774">George Selgin&#8217;s excellent new article, &#8220;Central Banks as Sources of Financial Instability,&#8221; published  in <em>The Independent Review</em></a>:</p>
<blockquote><p>The present financial crisis shows how central banks can fuel the financial booms that make severe busts possible. Unfortunately, theoretical discussions of central banking badly neglect its role in fostering financial instability, in part because they ignore its history and political origins.</p></blockquote>
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		<title>Stimulus Working?  More Evidence That It’s Not</title>
		<link>http://cafehayek.com/2010/03/stimulus-working-more-evidence-thats-its-not.html</link>
		<comments>http://cafehayek.com/2010/03/stimulus-working-more-evidence-thats-its-not.html#comments</comments>
		<pubDate>Wed, 10 Mar 2010 15:11:49 +0000</pubDate>
		<dc:creator>Don Boudreaux</dc:creator>
				<category><![CDATA[Intervention]]></category>
		<category><![CDATA[Seen and Unseen]]></category>
		<category><![CDATA[Stimulus]]></category>

		<guid isPermaLink="false">http://cafehayek.com/?p=8727</guid>
		<description><![CDATA[Writing in Investor&#8217;s Business Daily, Robert Higgs documents the fact that private investment is drying up in the U.S. &#8211; and he explains why.  Here&#8217;s a key selection:
Unfortunately, while private investment is the engine of economic growth, government spending (despite what generations of Keynesian economists have asserted) is the brake. To understand this negative relationship, [...]]]></description>
			<content:encoded><![CDATA[<p></p><p><a href="http://www.investors.com/NewsAndAnalysis/Article.aspx?id=525864">Writing in <em>Investor&#8217;s Business Daily</em></a>, Robert Higgs documents the fact that private investment is drying up in the U.S. &#8211; and he explains why.  Here&#8217;s a key selection:</p>
<blockquote><p>Unfortunately, while private investment is the engine of economic growth, government spending (despite what generations of Keynesian economists have asserted) is the brake. To understand this negative relationship, we need only scrutinize how the federal government&#8217;s spending is determined: namely, by political processes devoid of economic rationality.</p>
<p>In this light, we can appreciate that enhanced government spending does not bulk up the economy, nor merely crowd out worthwhile private activity. Instead, it undercuts, penalizes and distorts everything that private parties attempt to do to create wealth. Ham-fisted government regulations and additional taxes are known killers of economic growth.</p>
<p>The investors&#8217; famine and the government&#8217;s feast therefore are not merely coincidental, but causally connected.</p>
<p>Making matters worse, the explosion of the federal government&#8217;s size, scope and power since mid-2008 has created enormous uncertainties among investors.</p></blockquote>
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		<title>The Neo Con</title>
		<link>http://cafehayek.com/2010/03/the-neo-con.html</link>
		<comments>http://cafehayek.com/2010/03/the-neo-con.html#comments</comments>
		<pubDate>Tue, 09 Mar 2010 19:47:03 +0000</pubDate>
		<dc:creator>Don Boudreaux</dc:creator>
				<category><![CDATA[History]]></category>
		<category><![CDATA[Hubris and humility]]></category>
		<category><![CDATA[Man of System]]></category>
		<category><![CDATA[Myths and Fallacies]]></category>
		<category><![CDATA[Reality Is Not Optional]]></category>
		<category><![CDATA[War]]></category>

		<guid isPermaLink="false">http://cafehayek.com/?p=8723</guid>
		<description><![CDATA[Here&#8217;s a letter that I sent to the Wall Street Journal:
Bret Stephens interprets Iraq&#8217;s recent democratic election as proof that western modernity, with all of its marvels and freedoms, is dawning in that country (&#8220;Iraqis Embrace Democracy. Do We?&#8221; March 9).  And, of course, the Great Liberator who rescued Iraqis from barbarism&#8217;s clutch is none [...]]]></description>
			<content:encoded><![CDATA[<p></p><p>Here&#8217;s a letter that I sent to the <em>Wall Street Journal</em>:</p>
<blockquote><p>Bret Stephens interprets Iraq&#8217;s recent democratic election as proof that western modernity, with all of its marvels and freedoms, is dawning in that country (&#8220;<a href="http://online.wsj.com/article/SB10001424052748704187204575101904230528176.html">Iraqis Embrace Democracy. Do We?</a>&#8221; March 9).  And, of course, the Great Liberator who rescued Iraqis from barbarism&#8217;s clutch is none other than George W. Bush.</p>
<p>Mr. Stephens is mistaken.  Democracy neither brings modernity nor is an essential element of it.  <a href="http://www.amazon.com/Revolution-Formation-Western-Legal-Tradition/dp/0674517768/ref=sr_1_1?ie=UTF8&amp;s=books&amp;qid=1268163960&amp;sr=1-1">The fountainhead of the western freedoms and institutions that Mr. Stephens rightly admires was the fractured and overlapping jurisdictions that emerged in western Europe following the collapse of the Roman empire</a>.  The happy, if unintended, result was an inability of any one authority (say, a prince or a pope) to exercise complete sovereignty over the populace.  From this fractured sovereignty the rights of man slowly sprung, and only much later did democracy as we know it develop.</p>
<p>Our democracy wasn&#8217;t imposed by force of arms and could not have been so imposed.  More importantly, what makes us modern and free is not that we trot off to polling places regularly to make collective decisions but, rather, that our institutions still afford spaces in which each of us, as individuals, is free to make private decisions without significant interference from either the state or any reigning superstitions.</p>
<p>Sincerely,<br />
Donald J. Boudreaux</p></blockquote>
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