04/04/2015
“Felix would be better off in the sense of higher lifetime earnings if
he were given a cash transfer to invest than a subsidy restricted to
education.” (Lovenheim-Turner, Economics of Education, forthcoming
from Macmillan Education)
This libertarian thinks we individually and collectively are generally
better off when-within the bounds of common decency-our use of
economic resources is left to our own discretion.
First, we get the personal satisfaction of being in charge of our own
behavior. Of itself this has intangible benefits, such as development
of a sense of responsibility. Nothing else teaches us a lesson like
screwing up and having to take the consequences. It also avoids the
opposite, the pain and resentment of those subjected to too much nanny
state.
Second, the crash of 2007-2008 notwithstanding, the potential for the
government to destroy the economy far outweighs that of any
nongovernmental group or industry. Look how long the recovery took,
and look how much people resented the way the recovery money was
spent. My neighborhood was plastered with “Where’s my bailout?” bumper
stickers. And no one was giving them away; they cost actual real money
plus tax. I do believe that if the feds had just declared a tax
holiday to some benchmark, we would have weathered what was
essentially a supply shock much faster and better. Individuals, firms,
even U.S. states have a lot less potential to misspend than the
federal government just because their decimal points don’t sit to the
right of so many zeroes. Also, smaller mistakes tend to balance each
other out.
By the way, I have no desire to discuss what could or should have been
done to prevent the crash or the bubble that preceded it. I remember
late in the last century, maybe the 1980s, a chain letter pyramid
scheme took hold, and a few people made a lot of money. Most lost
their whole investment. Back in the 17th century we had the tulip
mania and in the 18th, the South Sea Bubble. There is no preventing
get-rich-quick schemes from grabbing hold of the public
imagination. Most people are enchanted by the idea of getting
something for nothing, and many Americans are so fat, dumb, and happy
they don’t recognize risk when it leers at them on the street.
So don’t bother me with woulda coulda shoulda, at least about bubbles.
Full disclosure: I’m copyediting this book, and the quotation at the
beginning reads as edited. But the author may just edit it right back
to the original, so don’t take it as chapter and verse.
Not sure when it’ll be published. I’m guessing the January list.