Thursday, February 25, 2016

Batman vs Hitler

Forum thread: Clarifying The Popularity Of Three Economic Rules


Surveys are very useful tools.  They make it really quick and easy to clarify just how popular, or unpopular, something is.  So I thought it would be helpful if we could clarify the popularity of three economic rules.  Which rule is the most popular?  Which rule is the least popular?  Let's find out!

To try and avoid some potential confusion... I should mention that I took the liberty of naming these rules.  It makes it easier to talk about them when they have names.  I'm not very clever though so I simply named them after some of my favorite economists.  James Buchanan was a Nobel Prize libertarian economist,  John Quiggin is a liberal economist and Alex Tabarrok is a libertarian economist.

So here are their rules...

Buchanan's Rule: Using a resource one way means sacrificing the other ways that it could also be used

A nation cannot survive with political institutions that do not face up squarely to the essential fact of scarcity: It is simply impossible to promise more to one person without reducing that which is promised to others. And it is not possible to increase consumption today, at least without an increase in saving, without having less consumption tomorrow. Scarcity is indeed a fact of life, and political institutions that do not confront this fact threaten the existence of a prosperous and free society. - James Buchanan, Richard Wagner, Democracy in Deficit: The Political Legacy of Lord Keynes

Eisenhower probably put it best...

Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children. The cost of one modern heavy bomber is this: a modern brick school in more than 30 cities. It is two electric power plants, each serving a town of 60,000 population. It is two fine, fully equipped hospitals. It is some fifty miles of concrete pavement. We pay for a single fighter plane with a half million bushels of wheat. We pay for a single destroyer with new homes that could have housed more than 8,000 people. This is, I repeat, the best way of life to be found on the road the world has been taking. This is not a way of life at all, in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron...Is there no other way the world may live? - Dwight D. Eisenhower

Quiggin's Rule: Society's limited resources should be put to more, rather than less, valuable uses

Even at the cost of lining up with [Tom] Friedman, I’d be pleased if the idea that war is a mostly futile waste of lives and money became conventional wisdom. Switching to utopian mode, wouldn’t it be amazing if the urge to “do something” could be channeled into, say, ending hunger in the world or universal literacy (both cheaper than even one Iraq-sized war)? - John Quiggin, War and waste

Tabarrok's Rule: Actions speak louder than words

Overall, I am for betting because I am against bullshit. Bullshit is polluting our discourse and drowning the facts. A bet costs the bullshitter more than the non-bullshitter so the willingness to bet signals honest belief. A bet is a tax on bullshit; and it is a just tax, tribute paid by the bullshitters to those with genuine knowledge. - Alex Tabarrok, A Bet is a Tax on Bullshit

In my opinion, these rules are all good rules.  I think it's beneficial when we abide by them and harmful when we don't.

What do you think?  Are these rules worthwhile or worthless?   Do you know of any other economic rules that are more worthwhile?


Reply to reply...


I disagree that you have at all demonstrated that rule 3 will have less clear consequences than voting. - Alvecia

People vote for Batman to rescue a cat from a tree...

X = Batman rescuing a cat from a tree

Is there a Y?  Of course there's a Y.  According to Buchanan's Rule (Rule #1)... there's always a Y.

So what is Y?

Y = Batman sitting at home twiddling his thumbs

In this case...

X > Y

Thanks to voting... society's limited resource, in this case Batman, was put to a more, rather than a less, valuable use.  Therefore... Quiggin's Rule (Rule #2)... was not violated.

But what if Y is different?

Y = Batman rescuing Gotham from imminent destruction

In this case...

X < Y

As a result of voting... society's limited resource, again Batman, was put to a less, rather than a more, valuable use.  Therefore... Quiggin's Rule was violated.

Let's get a little weird now...

X = Batman fighting alcohol traffickers

Y = Batman fighting Hitler

The time periods don't perfectly align... then again... we're talking about Batman here.

Most of us would agree that....

Y > X

Therefore... Quiggin's Rule was violated when people voted for X.  Batman would have fought alcohol traffickers instead of Hitler.

Let's get a little less weird and replace Batman, a fictional character, with Eliot Ness, a nonfictional character.  If people had not voted for prohibition... then Ness would have done something else instead.  What would that something else have been?  What was Y?  Would Y have been more or less valuable than the enforcement of prohibition?

Let's get a little more weird and imagine that Germans had voted for prohibition.  What was Y?  What if it had been the Holocaust?  In this case... given that Y was the least valuable use of society's limited resources... then voting for prohibition would not have been a violation of Quiggin's Rule.  It would have been extremely valuable if the Eliot Nesses had stopped enforcing the Holocaust and started enforcing prohibition.

With voting... you are never the one who gets to decide what Y is.  Therefore, voters never know what Y is.  Not knowing what Y is guarantees that Quiggin's Rule will be thoroughly and regularly violated.  When you spend your money though... you always know what Y is.  This is simply because you're the one who decides what Y is.  Again, Tabarrok's Rule is the only way that we can ensure that Quiggin's Rule is not violated.

That is to say, that other than your own obviously bias opinion, there is no reason to conclude that rule 3 is better than voting. - Alvecia

Sure I'd like to take credit for "my" argument.  But I really can't.  As I thought I made it clear in the OP... these aren't my rules.  I am not James Buchanan or John Quiggin or Alex Tabarrok.  Neither am I Nietzsche...

But have you ever asked yourselves sufficiently how much the erection of every ideal on earth has cost? How much reality has had to be misunderstood and slandered, how many lies have had to be sanctified, how many consciences disturbed, how much "God" sacrificed every time? If a temple is to be erected a temple must be destroyed: that is the law – let anyone who can show me a case in which it is not fulfilled! – Friedrich Nietzsche, On the Genealogy of Morality

Am I misunderstanding and slandering your reality?  Am I sanctifying lies?  Am I disturbing your conscience?  Am I sacrificing your "God"?  If a temple is to be erected... then a temple must be destroyed.  This is the law.  But it's really not my law!  I'm just the guy pointing it out to you and endeavoring to explain its relevance/importance.

You're really not happy with my attempt to build up my temple (aka tear down your temple).  But are you really sure that your temple is worth defending?  If you're going to defend something... then wouldn't it be a good idea to first establish whether it's truly worth defending?

John Quiggin is a liberal economist.  Here's his entire and only response to "my" argument.  Here's what he did not tweet...

"Xero's a moron who doesn't understand just how effective contingent valuation techniques truly are."

Quiggin did not tweet that.  He could have made that argument.  But he did not.  Instead, you are making this argument.  Except... not once have you used the term "contingent valuation" before.   Which means that you've never even heard the term before.  Do you think that Quiggin has heard the term before?  Do you think he's familiar with the concept?  I'm actually pretty sure that he is quite familiar with the concept... which begs the question of why he didn't even mention it in his tweet.

In case you missed it... Quiggin is your champion.  Watch...

That is, the neoliberal ideology itself has little to say about these questions. Neoliberals may regard democracy and ordinary notions of political liberalism with outright hostility (Lee Kuan Yew, the Mises Institute). Or, they may like Hayek, regard democracy and free speech as second-order goals, desirable only if they don’t get in the way of free markets. - John Quiggin, The ideology that dare not speak its name

There's Quiggin defending his temple (Democracy) against those who would tear it down.  

Obviously it's not hard for Quiggin to defend Democracy.  So why didn't he take the opportunity to do so when I clearly challenged Democracy?  

I'm here because your champion didn't even show up to the fight.  Or... he showed up to the fight... saluted me... and went on his merry way.

Even though I'm an atheist, I really love the story of Elijah versus the prophets of Baal...

24 And call ye on the name of your gods, and I will call on the name of the Lord: and the God that answereth by fire, let him be God. And all the people answered and said, It is well spoken.
25 And Elijah said unto the prophets of Baal, Choose you one bullock for yourselves, and dress it first; for ye are many; and call on the name of your gods, but put no fire under.
26 And they took the bullock which was given them, and they dressed it, and called on the name of Baal from morning even until noon, saying, O Baal, hear us. But there was no voice, nor any that answered. And they leaped upon the altar which was made.
27 And it came to pass at noon, that Elijah mocked them, and said, Cry aloud: for he is a god; either he is talking, or he is pursuing, or he is in a journey, or peradventure he sleepeth, and must be awaked.
28 And they cried aloud, and cut themselves after their manner with knives and lancets, till the blood gushed out upon them.
29 And it came to pass, when midday was past, and they prophesied until the time of the offering of the evening sacrifice, that there was neither voice, nor any to answer, nor any that regarded.

Right now you're trying to fight a battle that you're clearly not qualified to fight.  But you really don't need to fight this battle yourself!  Seriously!  You have plenty of champions to choose from!  Like Paul Krugman.  Send him an e-mail and let us know what he says.  If he doesn't reply because he's too busy lecturing or traveling or sleeping then send an e-mail to Quiggin.  If he doesn't reply then here's a page that lists UCLA's econ professors.  As you can see... their e-mail addresses are right there.  It's ridiculously easy to send them a link to this thread.

You're right that I'm biased.  I'm biased because I'm really confident that your champions are not going to tell you what you want to hear.  But please, by all means, feel free to prove me wrong.  Let me be crystal clear though... if you fail to prove me wrong... then this will provide even more justification for the erection of my temple (aka the destruction of your temple).

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